SSTI Digest

Geography: International

Report Shows U.S., Japan Still Lead EU in Innovation Capacity

The European Commission's 2001 European Innovation Scoreboard, characterizing the strengths and weaknesses in the capacity for innovation of the European Union (EU) and its member states, shows the EU continues to lag behind the U.S. and Japan. 

Released October 1, the scoreboard uses 17 indicators to rate each member state's capacity for encouraging innovative business and improving the competitiveness of their industry through innovation. The aspects of the innovation process measured by the scoreboard are: 

Availability and the use made of people with the right skills, using figures including the supply of new scientists and engineers and the percentage of the workforce employed in technology sectors of industry. 

Creation of new ideas, based on figures for R&D expenditure and patent applications. 

Innovation by firms as measured by statistics such as the percentage of small and medium-sized enterprises (SMEs) that develop product or process innovations themselves or in cooperation with other firms. 

A group of indicators covering a range of issues including the supply of high-tech venture capital, new-to-market products as a percentage of sales by manufacturers, and value-added in high-tech sectors. 

Comparing current EU and U.S. performance, the most significant U.S. advances over the EU include the level of R&D by business (74 percent higher than the EU mean), the amount of new capital raised (73 percent), the level of high-tech patenting (up to 65 percent), and the percentage of the working population with some form of post-secondary education (65 percent). The EU leads only in the supply of new science and engineering graduates (28 percent). 

Japan leads the EU in the level of R&D by business (almost double the EU average) and to a lesser extent in supply of science and engineering graduates and share of the working population with a post-secondary education. The EU leads Japan in the level of public spending on R&D and spending on information and communications technology equipment and services. 

The overall innovation performance of the EU is improving. Trends in the indicators show countries such as Finland and Denmark, whose performance already is considered strong, are moving ahead. Greece and Spain also are approaching the EU average, although from a relatively low level. The three largest EU economies – France, Germany and UK – are improving, but at rates below the EU average. 

Sufficient data on ten of the indicators allows assessment of each indicator's trend over the past four to six years. On average, these indicators have improved by about 30 percent, but three of them show a decline for the EU as a whole: levels of public R&D spending, spending by business on R&D, and value-added from high-tech manufacturing. 

Overall, the gap between the best-performing and weakest-performing member states appear to be growing. For most of the indicators for which comparable data is available, the U.S. and Japan are outperformed by at least one of the member states. 

The European Innovation Scoreboard was requested by the Lisbon European Council of March 2000 as part of its strategy for turning the EU into the most competitive and dynamic knowledge-based economy in the world within the next decade. The scoreboard, to be updated and published annually, is available at: 

International Contributions to Understanding and Encouraging Cluster Formation

Whether it's called clusters or localization economies, the aggregation of firms in the same or closely related industries has captured the attention of many state and local tech-based economic development efforts. Understanding the phenomenon and formulating effective public policy to encourage or support clustering presents challenges for practitioners and researchers alike. 

In addition to works on the topic previously covered in the Digest and available in SSTI’s Bookstore (such as Michael Porter’s On Competition or Ross DeVol’s Blueprint for a High-Tech Cluster), localization economies also have captured the research interests of international researchers. For example, the Canadian Innovations Systems Research Network (ISRN) is in the process of conducting a five-year $2.5 million (Canadian) study to examine the impact and importance of cluster-driven innovation in Canada. According to the ISRN website, Innovation Systems and Economic Development: The Role of Local and Regional Clusters in Canada will “investigate how local networks of firms and supporting infrastructure of institutions, businesses and people in communities across Canada interact to spark economic growth.” The dynamics of 20 different clusters across five regions and in both rural and urban economies will be examined through the project. 

For the project, ISRN is holding conferences and workshops to review and discuss localization research conducted across the world. Several of the working papers presented at the 2001 ISRN annual meeting may be of interest to Digest readers, including: 

Quebec Commits $250 Million for Biotech

A new biotech-opolis in Quebec soon may serve as one of the best organized business centers for biotech, biopharmaceutical, and biocomputer companies in the world, government leaders hope. The Quebec government, Investissement Quebec, the City of Laval, Laval Technopole and Institut national de la recherche re scientifique (INRS), are investing $250 million over five years in cash, in-kind donations, and forgone tax revenues to support the massive cluster project. Additional partners include various academic, economic and scientific communities in metropolitan Montreal and Laval.

The City of Biotechnology and Human Health of Metropolitan Montreal, or Biotech City for short, will function as a business and science center, with more than $100 million alone coming from INRS to equip the city with major scientific facilities and to restructure the INRS’s Armand-Frappier campus. The INRS focuses on research and learning at the graduate school level while responding to the economic, social and cultural needs of Quebec.

Biotech City – being situated on almost 11 million sq. ft. in the Laval Science and High Technology Park – will house numerous centers for research, learning, commercial and new business development, and will accommodate biotech and biopharmaceutical companies. The centers will include:

Australia Announces $2.9 B Innovation Package

Imagine President Bush using his entire State of the Union Address to present a $23 billion five-year strategy to encourage research, innovation, and entrepreneurship in the country. While it has not received much press in the United States, the equivalent happened when Australian Prime Minister John Howard gave his annual Federation Address on January 29.

Backing Australia’s Ability: An Innovation Action Plan for the Future is the Howard government’s comprehensive strategy to strengthen the Commonwealth’s position in the global economy. The five-year price tag to the government for the new initiatives is 2.9 billion Australian dollars (US equivalent is $1.56 billion). An additional $6 billion ($3.23 billion US equivalent) in private investment is expected to be generated from the plan. In 2000-01, the country of only 19.3 million people spent $4.5 billion ($2.43 billion U.S. equivalent) on research and innovation programs.

For comparison, the $2.9 billion increase is the equivalent in US dollars of committing $81 per person in new funding for tech-based economic development initiatives over the five-year period. Highlights of the Innovation Action Plan (all figures in Australian dollars) include:

Industrial R&D and Innovation Programs

Recent Reports & Studies: Gans, Hsu & Stern: When does Start-up Innovation Spur the Gale of Creative Destruction?

Why do some start-up technology businesses choose to directly commercialize their innovations, taking on the industry titans as is common in the electronics industry, while other new tech firms, such as those involved in biotechnology, choose a path of cooperation with the industry leaders, commercializing through licenses, joint ventures, and outright acquisition? The answer(s) should help economic development practitioners and science and technology policy makers design the most effective strategies for technology-based entrepreneurial assistance.

Ireland Launches $681 Million Technology Initiative

Last week, Mary Harney, Ireland’s Deputy Prime Minister and Minister for Enterprise, Trade and Employment, announced the establishment of a £560m ($681M U.S.) Technology Foresight Fund to establish Ireland as a location for world class research excellence in niche areas within biotechnology and information and communication technologies. According to Reuters’ reports, funding for the new initiative will be spread over seven years. The Technology Foresight Fund — the country’s single largest investment ever for research, technological development and innovation — was conceived and designed by the Irish Council for Science, Technology, and Innovation (ICSTI), a publicly created organization to advise the Irish government on the strategic direction of science, technology and innovation policy. Separate Task Force panels or subcommittees investigated technology development issues in eight industrial sectors: natural resources; chemicals/pharmaceuticals; health and life sciences; information and communications technology; materials and manufacturing; transport and logistics; construction/infrastructure; and energy. From the panels’ findings, the Task Force advanced several recommendations for consideration by the Ministry of Science, Technology and Commerce. The culmination was the decision for the Technology Foresight Fund to focus its activities on biotechnology and information and communication technologies — sectors identified to hold significant potential for Ireland as it moved to a technology-oriented economy. A new research foundation will be established to evaluate research projects and to manage and allocate funding from the Technology Foresight Fund. The foundation’s objective will be to create a critical mass of world-class research within the biotech and information technology niche areas to be identified by the foundation. The new research foundation, to be established over the next three months, will support researchers in Ireland’s colleges and research institutes through competitive international peer reviewed solicitations. In addition, the foundation will have the authority to established its own laboratories, if necessary, to secure world class performance. More information on the Technology Foresight Fund can be found at:


Eisenhower Exchange Fellowships announces a competition for U.S. citizens in leadership positions with significant professional experience (10-20 years) for Fellowships to:

Celeste Named Ambassador to India

Former Ohio Governor Richard F. Celeste was sworn in as the United States Ambassador to India last week. Celeste has been a leader in the field of technology-based economic development for the last 15 years. While governor, Celeste established Ohio's Thomas Edison Program.

Japan's Plan to Double It's R&D Budget is on Track

Japan is on schedule to double the government's R&D investment by the year 2000, according to a June 13 National Science Foundation Issue Brief.

Western Europe Increasing Competitiveness in R&D Capacity

During the past decade, the European Union (EU) invested heavily in civilian R&D by building first-class laboratories and expanding higher education in science and engineering. Its efforts, according to the Data Brief for a new National Science Foundation report, Human Resources for Science and Technology: The European Region, are narrowing the lead the U.S. holds in R&D.

1996 World Competitiveness Yearbook Released; U.S. Ranks First

The International Institute for Management Development has released its annual World Competitiveness Yearbook, and the United States has reclaimed its spot atop the list. The U.S. was followed by Singapore, Hong Kong, Japan, and Denmark.