Building an Effective Skills Strategy for Portugal. Developing Skills for Innovation. Alistair Nolan Lisbon, July 4 th, 2014

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1 Building an Effective Skills Strategy for Portugal Developing Skills for Innovation Alistair Nolan Lisbon, July 4 th, 2014

2 Main messages -Innovation is a broad concept. 2

3 Main messages -Innovation is a broad concept. The implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organisational method in business practices, workplace organisation or external relations. OECD and Eurostat (2005), Oslo Manual: Guidelines for Collecting and Interpreting Innovation Data. OECD, Paris. 3

4 Main messages -Innovation occurs through R&D and science.but also non-r&d-based investments (e.g. in designs, data and new business models). -So, no single level of educational attainment or field of study is optimal for driving innovation. -A broad mix of skills is needed, depending on the type of innovation prevalent in a given economy. -But common policy challenges arise in achieving this broad mix. 4

5 How does human capital spur innovation? -Skilled people create and implement innovations. A 10% increase in the share of the workforce with at least a college degree in US cities raises patenting per capita by about 10% (Carlino and Hunt, 2009). -Skilled people help absorb innovations. Innovation in firms is particularly associated with in-house development of skills, rather than their acquisition through hiring, owing to the former s effects on absorptive capacity (Jones and Grimshaw, 2012). -Synergies with other innovation inputs. For instance, the uptake and productive use of ICTs significantly influenced by management and employee skills (Gretton et al, 2004). -Skills are crucial to enterprise growth and survival. Entrepreneurial activity is often a carrier of innovation and structural economic change. -More skilled users and consumers of products and services provide suppliers with ideas for improvement (Von Hippel et al, 2011). 5

6 Features of Innovation in Portugal 6

7 Gross domestic expenditure on R&D, 2001 and 2011 As a percentage of GDP % Source: OECD, Main Science and Technology Indicators Database, June

8 Patents and trademarks per capita, Average number per million population Trademarks abroad per capita LUX CHE MEX PRT CHL ARG GRC TUR ZAF SVK SAU POL BRA RUS CHN SVN EST CZE ESP HUN ISL NZL AUS CAN DNK IRL GBR NLD SWE ISR NOR FRA USA DEU AUT FIN ITA EU28 BEL OECD KOR JPN BRIICS IDN IND Axes in logarithmic scale Triadic patent families per capita Source: Source: OECD, Patent Database, June 2013; US Patent and Trademark Office Bulk Downloads: Trademark Application Text hosted by Google, May 2013; OHIM Community Trademark Database CTM Download, May 2013; JPO, Annual Reports , June 2013.

9 However, across the OECD area many innovating firms don t invest in R&D. Their innovation is driven by Knowledge-based Capital. 9

10 What is knowledge-based capital (KBC)? Computerised information Innovative property Economic competencies 1 0

11 Computerised information Software and databases Innovative property Economic competencies 1 1

12 Computerised information Innovative property Copyrights, patents, trademarks, designs Economic competencies T M 1 2

13 (brand equity, firm-specific human capital, business networks, organisational know-how that increases enterprise efficiency, etc.) Computerised information Innovative property Economic competencies 1 3

14 KBC accounts for near to or over half of all business investment in several countries Business investment in KBC and tangible assets (% adjusted GDP, 2010) 35% 30% 25% 20% 15% 10% 5% 0% Tangible capital Computerised information Innovative Property Economic Competencies Source: OECD calculations based on INTAN-Invest, Eurostat and multiple national sources. 1 4

15 Knowledge-based capital related workers, 2012 As a percentage of total employed persons Organisational Capital Design Overlapping assets Computerised Information Research & Development USA GBR ISL NOR FRA DEU SWE NLD BEL EST SVN FIN IRL AUT LUX CZE POL DNK GRC ESP HUN PRT ITA SVK TUR % Source: OECD, based on United States Occupational Information Network Database, US Current Population Survey and European Union Labour Force Survey, June

16 Many countries worry that interest in science is low and that too few students particularly women pursue studies in science and engineering. 16

17 Public perception of scientific research benefits, 2010 Have the benefits of scientific research outweighed the harmful results? Benefit much outweighs harm Benefit slightly outweighs harm Benefit = Harm Harm slightly outweighs benefit Harm strongly outweighs benefit Don t know As a percentage of respondents Source: OECD, based on European Commission, US National Science Foundation and other national data sources, June

18 Graduation rates at doctoral level, 2000 and 2011 As a percentage of population in the reference age cohort % of doctorate degrees aw warded to women. Source: OECD, based on OECD (2013), Education at a Glance 2013:OECD Indicators, and OECD Education Database, July

19 Doctorate holders in the working age population, 2009 (%) Women Men LUX CHE DEU USA GBR ISR CAN ISL FIN FRA NLD AUS NOR ESP BEL IRL SVN DNK HUN GRC PRT LVA TUR OECD, based on OECD/UNESCO Institute for Statistics/Eurostat data collection on Careers of Doctorate Holders 2010; OECD Main Science and Technology Indicators and OECD Education Attainment Database, June

20 Graduates at doctorate level, 2011 By field of education % 100 Sciences Health and welfare Social sciences, business and law Share of new science and engineering doctorates awarded to women Engineering, manufacturing and construction Humanities, arts and education Services and agriculture Source: OECD, based on OECD Education Database and national sources, July

21 Researchers by sector of employment, 2011 As a percentage of total researchers, full-time equivalent % 100 Business enterprise Government Higher education Private non-profit Share of business enterprise in total R&D expenditures OECD, Research and Development Statistics Database, June

22 Young firms contribute disproportionately to job creation (and radical innovation) Source: OECD, Dynemp project. 22

23 Thank you 23

24 References Carlino, G. and R. Hunt (2009), What Explains the Quantity and Quality of Local Inventive Activity?, Federal Reserve Bank of Philadelphia Research Department Working Paper, No , PA. Gretton, P., J. Gali and D. Parham (2004), The Effects of ICTs and Complementary Innovations on Australian Productivity Growth, in OECD, The Economic Impact of ICT: Measurement, Evidence and Implications, OECD, Paris. Jones, B. and D.Grimshaw (2012), The Effects of Policies for Training and Skills on Improving Innovation Capabilities in Firms, NESTA Working Paper Series 12/08. Von Hippel, E., S. Ogawa and J.P.J. de Jong (2011), The Age of the Consumer Innovator. Available at 24

25 OECD Thematic Session: Developing skills for innovation Please take some time to reflect on how these questions resonate with your individual experience and daily work. Based on your experience, give concrete examples of where skills issues impact on innovation and where you think improvement is needed. As a group, please: Discuss Provide concrete examples that illustrate your points On each poster, please write down: The results of your group discussion 25