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International Institutefor Educational Planning

In search of the Triple HelixAcademia–industry–government interactionin China, Poland, and the Republic of Korea

Edited by Michaela Martin

New trends in higher education

In search of the Triple Helix


Academia–industry–government interaction in China, Poland, and the Republic of Korea

Edited by Michaela Martin


The views and opinions expressed in this booklet are those of the author and do not necessarily represent the views of UNESCO or the IIEP. The designations employed and the presentation of material throughout this review do not imply the expression of any opinion whatsoever on the part of UNESCO or the IIEP concerning the legal status of any country, territory, city or area or its authorities, or concerning its frontiers or boundaries.

The publication costs of this study have been covered through a grant-in-aid offered by UNESCO and by voluntary contributions made by several Member States of UNESCO, the list of which will be found at the end of the volume.

Published by: International Institute for Educational Planning7–9 rue Eugène Delacroix, 75116 Parise-mail: [email protected]: www.iiep.unesco.org

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TABLE OF CONTENTS

List of abbreviations 7List of tables 10List of fi gures 12About the authors 14I. The Triple Helix in the making? Conceptual foundations

and focus of this study, Michaela Martin 151.1 Introduction 151.2 Changing perceptions and moving boundaries 161.3 Rationale and focus of this study 22

II. Academia–industry–government interaction: the case of China, Lan Xue and Ling Zhou 332.1 Introduction 332.2 China’s economy: a system in transition 342.3 Universities in China’s national innovation system 462.4 Academia and university linkages: a general analysis 642.5 Evaluation of government policies and programmes 842.6 Conclusions 104

III. Academia–industry–government interaction: a case study in Poland, Monika Kondratiuk-Nierodzinska and Agnieszka Olechnicka 1093.1 Introduction 1093.2 Poland’s economic system and policy 1103.3 Overview of Poland’s national innovation system 1223.4 Policies and programmes for the stimulation

of academia–industry relations in Poland 1423.5 Administrative frameworks of policies and programmes

for the stimulation of academia–industry relations in Poland 151

3.6 Assessment of the effectiveness of academia–industry partnership incentives and support instruments 155


6

Table of contents

IV. Academia–industry–government interaction in the Republic of Korea, Sunyang Chung 1634.1 Introduction 1634.2 Development of the Republic of Korea’s

national innovation system 1654.3 Legal framework and policies for R&D collaboration 1934.4 Conclusions 202

V. In search of the Triple Helix in China, Poland, and the Republic of Korea, Virginia Acha and Michaela Martin 2075.1 A tale of three countries and the search

for the Triple Helix 2075.2 Lessons for academia–industry linkages in developing

economies: the search for the Triple Helix 237Bibliography 245


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LIST OF ABBREVIATIONS

ARP Industrial Development Agency (Poland)BCP Branch Contact Point (Poland)BERD Business Expenditure on R&DBI Business Incubator (Republic of Korea)BK21 Brain Korea 21 programmeCAS Chinese Academy of SciencesCCCPC Central Committee of the Communist Party of ChinaCDMA code division multiple access (mobile phone service)CEEC Central and Eastern European countryCEM Common European MarketCPC Communist Party of ChinaCPO Patent Offi ce of the People’s Republic of ChinaEI Engineering IndexERC Excellent Research Center (Republic of Korea)ET environmental technologyETRI Electronics and Telecommunication Research Institute

(Republic of Korea)GDP gross domestic productGER gross enrolment rateGERD gross domestic expenditure on R&DGNI gross national incomeGRDP Great Research and Development Programmes (Poland)GUS Central Statistical Offi ce of PolandHE higher educationHEI higher education institutionIMD International Institute for Management Development

(Switzerland)IMF International Monetary FundIOPRD Integrated Operational Programme of Regional

Development (Poland)IPO initial public offeringIPR intellectual property rightsIRC Innovation Relay Centre (Poland)ISTP Index to Science and Technical Proceedings


8

List of abbreviations

I–U–I Industry–University–Institute (Republic of Korea)JBR Branch research and development unit (Poland)KBN State Committee for Scientifi c Research (Poland)KBS knowlegde-based societyKIMM Korea Institute of Machinery and MaterialsKIP Knowledge Innovation Programme (China)KIST Korea Institute of Science and TechnologyKOITA Korea Industrial Technology AssociationKRF Korea Research FoundationKRICT Korea Research Institute of Chemical TechnologyKSI National Network of Innovation (Poland)KSU National Network of Services for SMEs (Poland)LAN local area networkMENiS Ministry of Education and Sports (Poland)MGiP Ministry of Economy and Labour (Poland)MNiI Ministry of Scientifi c Research and Information

Technology (Poland)MOCIE Ministry of Commerce, Industry and Energy

(Republic of Korea)MOE Ministry of Education (China)MOE Ministry of Education (Republic of Korea) MOE-HRD Ministry of Education and Human Resources

Development (Republic of Korea)MOST Ministry of Science and TechnologyMSRIT Ministry of Scientifi c Research and Information

Technology (Poland)NCP National Contact Point (Poland)NDP National Development Plan (Poland)NHTZ national high-tech development zones (China)NPL non-performing loanNSFC National Natural Science Foundation of ChinaNSRD National Strategy for Regional Development (Poland)NURI New University for Regional Innovation

(Republic of Korea)OBM original brand manufacturing (China)ODM original design manufacturing (China)OECD Organisation for Economic Co-operation and

Development


9

List of abbreviations

PAN Polish Academy of SciencesPARP Polish Agency for Enterprise DevelopmentPCT Patent Cooperation TreatyPKA State Accreditation Committee (Poland)PLN Polish zloty (currency)PRC People’s Republic of ChinaPRI public research instituteR&D research and developmentRCP regional contact pointRCPI Regional Centre of Patent Information (Poland)RFI regional fi nancing institution (Poland)RI research institutionRIS regional innovation strategy (Poland)RRC Regional Research Center (Republic of Korea)SCI Science Citation IndexSIPO State Intellectual Property Offi ce (China)SMBA Small and Medium Business Administration

(Republic of Korea)SME small and medium-sized enterpriseSOOIPP Polish Business and Innovation Centres AssociationSOP-GCE Sector Operational Programme–Growth

of the Competitiveness of Enterprises (Poland)SSC State Science Commission (China)SSTC State Science and Technology Commission (China)STEPI Science and Technology Policy Institute

(Republic of Korea)STIO Science & Technology Innovation Offi ce

(Republic of Korea)TBI Technology Business Incubator (Republic of Korea)TIC Technology Innovation Center (Republic of Korea)VC venture capitalWIPO World Intellectual Property OrganizationWTO World Trade Organization


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LIST OF TABLES

Table 1.1 Basic economic indicators, 2005 25Table 1.2 Total gross domestic expenditure on R&D (GERD),

1996–2003 27Table 1.3 Basic science and technology indicators: gross

domestic expenditure on R&D (GERD) and total number of researchers, 2005 27

Table 1.4 Human capital in science, technology, and innovation, 1996–2003 29

Table 2.1 An example of the income structure of a well-known Chinese university 59

Table 2.2 R&D spending by Chinese universities (1991–2004, 100 million yuan, %) 66

Table 2.3 Technology contracts in China (2001–2004, billion yuan) 67

Table 2.4 Technology contracts of Tsinghua University 68Table 2.5 Income generated by Chinese universities through

patent licensing and sales (1985–2002) 69Table 2.6 Service invention patents granted to

Chinese universities (1996–2003, piece, %) 70Table 2.7 Science and technology research centres

by type of university in China (1999–2002) 71Table 2.8 International joint research centres

in Tsinghua University 72Table 2.9 Regional distribution of international partners 73Table 2.10 Ownership of research centres (%) 73Table 2.11 General statistics of university-owned enterprises

in science parks (2004, billion yuan) 76Table 2.12 Growth of university-owned enterprises

(billion yuan) 79Table 2.13 Growth of university-owned science

and technology enterprises (billion yuan) 80Table 2.14 Top 20 universities with highest total sales

from affi liated enterprises (2004) 81Table 2.15 Provinces and cities with profi ts exceeding

100 million yuan from university-affi liated enterprises (2004, million yuan) 82


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List of tables

Table 2.16 Industry distribution of university-owned listed enterprises (2000–2002) 83

Table 3.1 Dynamics of gross domestic product and gross value added in 2000–2005 (average prices compared with the previous year, previous year = 100%) 111

Table 3.2 Engagement of Polish enterprises in R&D in the years 1998–2000 113

Table 3.3 Main industrial policy papers issued in Poland (1999–2005) 117

Table 3.4 Main technological development documents in Poland (1999–2005) 118

Table 3.5 Participation rates in tertiary education in Poland 123Table 3.6 Students and graduates according to the course

of studies 124Table 3.7 R&D in higher education institutions (2001) 125Table 3.8 Structure of Poland’s R&D sector (2001) 134Table 3.9 Basic characteristics of R&D spending in Poland 136Table 3.10 ‘Targeted’ research projects fi nanced by the former

State Committee for Scientifi c Research (KBN) in the years 1994–2001 146

Table 4.1 Major economic indicators in the Republic of Korea 166

Table 4.2 Role of the Republic of Korea’s Government in the national innovation system 168

Table 4.3 Sources of the Republic of Korea’s national R&D expenditure 178

Table 4.4 National R&D expenditure by sector of performance (billion won) 179

Table 4.5 Number of researchers by year 182Table 4.6 R&D budget trend of the Republic of Korea’s

Government 189Table 4.7 Legal framework for the Republic of Korea’s

R&D collaboration 194Table 4.8 Major characteristics of R&D collaboration

programmes 201Table 5.1 Public support programmes for research and

innovation in Poland 214


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LIST OF FIGURES

Figure 1.1 Integrated model of R&D collaboration 19Figure 2.1 GDP during the 10th Five-Year Period and

growth rate 39Figure 2.2 Industrial structure of China in selected years (%) 40Figure 2.3 Higher education funds as a proportion of GDP

(1999–2003) 42Figure 2.4 GERD as a proportion of GDP (2000–2004) 42Figure 2.5 Scientists and engineers as a proportion of

S&T personnel 43Figure 2.6 R&D personnel in selected countries 44Figure 2.7 National science and technology publications

(1994–2004) 44Figure 2.8 Science and technology papers of selected countries

catalogued by SCI, EI, and ISTP as a whole in 2004 45Figure 2.9 China’s national innovation system and universities

since the 1950s 48Figure 2.10 Innovation entities in China’s current national

innovation system 54Figure 2.11 Science and technology funding to universities and

colleges by source of funds 55Figure 2.12 Domestic service inventions granted by SIPO,

as a share of total industrial sector, 2001–2004 (%) 56Figure 2.13 R&D expenditure in China by character of work,

2000–2004 (%) 61Figure 2.14 R&D expenditure in selected countries

by character of work (%) 62Figure 2.15 R&D expenditure by performing sectors,

2000–2004 (%) 63Figure 2.16 R&D expenditure in selected countries

by performing sector (%) 64Figure 2.17 Key Technologies R&D Programme (1982–2004) 89Figure 2.18 Funds from central government for

the Key Technologies R&D Programme (1996–2004) 89


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List of fi gures

Figure 2.19 Innovation fund for small technology-based fi rms (1999–2005) 91

Figure 2.20 Number of projects in the 863 Programme (1986–2004) 92

Figure 2.21 Achievements of the 863 Programme (1986–2004) 93Figure 2.22 Achievements of new high-tech industrial

development zones (2001–2004) 94Figure 2.23 Total funds of the Natural Science Foundation

of China (1991–2005) 96Figure 2.24 Deployment of 863 Programme

by type of performers 97Figure 2.25 Distribution of chief scientists being appointed

to the implementation of the 973 Programme (2001–2005) 98

Figure 2.26 Patent applications fi led and patents granted by SIPO 102

Figure 2.27 China’s universities in the domestic technology market (1998–2004) 103

Figure 3.1 Institutional organization of Poland’s national innovation system 127

Figure 3.2 Structure of R&D expenditure in the Polish R&D sector (2003) 135

Figure 3.3 Trends in R&D spending in Poland 137Figure 3.4 Structure of R&D funding by source (%) 138Figure 3.5 Sources of venture capital in Poland (2001) 154Figure 4.1 Trend of R&D expenditure in the Republic of Korea,

and ratio to GDP (in real value) 176Figure 4.2 Impact of IMF jurisdiction on

the Republic of Korea’s national innovation system 186Figure 4.3 Development of the Republic of Korea’s

national innovation system 191Figure 5.1 Capabilities for academia–industry engagement 239


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ABOUT THE AUTHORS

Virginia Acha is Director, Public Affairs Strategy and Analysis (Europe), at Pfi zer Ltd. Prior to this, she was an academic at Imperial College Business School, UK, working on innovation strategy and collaborative practice. She has held posts at a number of universities, including a lectureship at the University of Sussex’s Science Policy Research Unit.

Sunyang Chung is a Dean of the William F. Miller School of MOT (Management of Technology) at Konkuk University, Seoul, Republic of Korea. He is also a lifetime fellow of the Korea Academy of Science and Technology (KAST), where he is currently Director of the Policy Research Center.

Monika Kondratiuk-Nierodzinska is Assistant Professor in the Economics and Management Faculty of the University of Bialystok, Poland. Her main research interests are innovation performance, technology transfer, and innovation systems at the national and regional level in Poland.

Michaela Martin is a Programme Specialist at UNESCO’s International Institute for Educational Planning (IIEP). An expert in higher education policy-making and planning, she is in charge of IIEP’s research project on the management of university–enterprise partnerships and academia–enterprise–government relations.

Agnieszka Olechnicka is Assistant Professor at the Centre for European Regional and Local Studies, University of Warsaw, Poland. Her research interests lie in regional development and regional innovativeness. She has worked in particular on the role of science institutions in regional development and the problem of knowledge absorption for enterprises.

Lan Xue is a Chang-Jiang Chaired Professor and Dean of the School of Public Policy and Management at Tsinghua University, China, and an Adjunct Professor at Carnegie Mellon University, USA. He is also a non-resident Senior Fellow at the Brookings Institution and a member of the Governing Board of IDRC.


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I. THE TRIPLE HELIX IN THE MAKING? CONCEPTUAL FOUNDATIONS AND FOCUS OF THIS STUDY

Michaela Martin

1.1 Introduction

University–industry partnerships have moved high onto the policy agenda of many governments worldwide in recent decades and become a new and expanded phenomenon (Mowery and Sampat, 2004b: 220). They cover a wide range of modalities in both the teaching and research domains. Indeed, they comprise more traditional linkages, such as student placement schemes, staff exchanges, consultancy services, continuing professional development, and joint research and development (R&D), as well as more recent activities such as small enterprise development – the creation of spin-offs for the commercialization of R&D products and the development of consortia for collaborative R&D at the international level (Martin, 2000a: 40–54).

Earlier research conducted by IIEP (Martin, 2000a; Martin, 2000b; Martin, 2003) focused on innovative tools developed by higher education institutions (HEIs) to manage their university–industry linkages. This research has shown that the concern with such partnerships developed within the context of broader changes in the environment of HEIs, including globalization and increased economic competition at the international level, and the growing recognition of knowledge as a production factor within knowledge economies. This has led to tremendous change worldwide in social expectations of higher education as a motor of human resource development and producer of knowledge.

In this context, university–industry partnerships are conceptualized as a means to bridge the perceived gap between the science base and the productive sector, which would allow new knowledge to be transformed rapidly into innovation. They are also seen as an important tool to make higher education more relevant for employment and to ease entry into


16


the labour market. University–industry partnerships are thus frequently seen by policy-makers as an important instrument for local and national economic and social development, productivity, and job creation (OECD, 1999).

In this book, the terms ‘academia–industry linkages’ or ‘academia–industry partnerships’ will be used because they encompass a broader range of interactions than those defi ned as ‘university–industry collaboration’ in the core literature.1 Indeed, academia includes far more than universities and institutions of higher education. Research organizations engaged in basic, applied, and development research play a signifi cant role in knowledge production, and many of them are also engaged in linkages with the enterprise sector. In this project, the terms ‘enterprise’ and ‘industry’ will be used interchangeably, and both encompass organizations from the public and private sector.

1.2 Changing perceptions and moving boundaries

The concern with knowledge as a production factor that bears on the economy for international competitiveness has led to changes in the perception of the respective roles of academia and research institutions, enterprises, and governments in the innovation process. An earlier perception of the role of universities and other research bodies, known as the ‘linear model of innovation’, conceived their main roles as creators and disseminators of knowledge. It was understood that this knowledge would be absorbed, in a linear fashion, from basic to applied research, and be a major ingredient for product and process innovation in the productive sector, which would happen in a somewhat automatic fashion (Bush, 1945).

1. Foundation research in this fi eld was developed from studies in the USA and the UK, where universities, and not research organizations, dominate public research activities. As Mowery and Sampat (2004b: 211) note: ‘Although universities fulfi l broadly similar functions in the innovation systems of most industrial and industrializing economies, the importance of their role varies considerably, and is infl uenced by the structure of domestic industry, the size and structure of other publicly funded research performers, and other numerous factors’. See Mowery and Sampat (2004b) for a comprehensive account of the role of universities in national innovation systems.


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The Triple Helix in the making?Conceptual foundations and focus of this study

More recently, science policy researchers have developed new conceptual frameworks. These frameworks add to the traditional functions of academic institutions (universities or research centres) as an ‘entrepreneurial’ mode of functioning to engage directly in economic development through enterprise and spin-off creation (Etzkowitz and Leydesdorff, 2000). It is certainly true that in OECD (Organisation for Economic Co-operation and Development) countries, research organizations and universities have lost the monopoly of scientifi c knowledge creation and dissemination since many enterprises have developed research capacities over the years which are sometimes more advanced than that of the public sector. R&D activities in enterprises frequently account for two thirds of total R&D expenditure (OECD, 2006b). Under this new conception of roles, innovation is no longer seen as a linear process of knowledge transformation, but rather as a process that occurs in a spiral mode and through strategic networking between different actors at the national and international levels in pluri-disciplinary knowledge networks. Gibbons (1998) termed this phenomenon the ‘Mode 2’ type of research.

Models of research and innovation

Earlier research conducted by IIEP on the management of university–industry linkages (Hernes and Martin, 2001) concluded that governmental action, as well as existing legal frameworks, are important factors conditioning the development of university–enterprise partnerships. This result is in line with a change in the perception of the role of governments in supporting academia–industry partnerships. This new role has been encapsulated by science policy researchers under theoretical frameworks such as the ‘triangle of university–industry–government relations’ (Sabato and Botana, 1968), the ‘national systems of innovation’ (Freeman, 1987; Lundvall, 1993; Nelson, 1993; OECD, 1999; 2002), or more recently as the ‘Triple Helix of university–industry–government relations’ (Etzkowitz and Leydesdorff, 1996, 1997; Leydesdorff and Meyer, 2006). Sabato and Botana (1968: 125) see the government in developing countries as the main actor responsible for ‘implementing a science policy connecting the scientifi c and industrial infrastructures’.


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National innovation systems are defi ned by Metcalfe as the set of distinct institutions which jointly and individually contribute

to the development and diffusion of new technologies and which provide the framework within which governments form and implement policies to infl uence the innovation process. As such, it is a system of interconnected institutions to create, store and transfer the knowledge, skills and artifacts which defi ne new technologies (Metcalfe: 1995: 12).

Under this approach, the government’s role is to act as a coordinator among academia, public research institutions (PRIs), and industry in order to promote interaction among them and create an environment conducive to innovation.

In addition to the innovation systems approach, the ‘Triple Helix of university–industry–government’ metaphor was introduced by Etzkowitz and Leydesdorff (1996; 1997). These authors see academia–industry–government relations as an interwoven network of relationships among the three actors that infl uence each other. Rather than a static mapping of linkages, the Triple Helix model recognizes that the respective roles of the different actors change over time, and that correspondingly this dynamic provokes changes in the internal confi guration of each actor. Both national and regional governments play an important role in the national system of innovation and in the knowledge economy, as the coordinating actors within the Triple Helix.

Among the many forms of engagement between academia, industry, and government, much attention has been recently placed on the potential for these linkages to accelerate research and technological development within and across economies. The Triple Helix model anticipates a synergistic process of scientifi c achievement and accelerated innovation across the different actors through collaboration. Although scholars are fi nding other metrics to capture this progress (Leydesdorff and Meyer, 2006), there are still many questions about the potential for these collaborations to leverage gains in innovation and scientifi c development, and the processes required to enable Triple Helix structures and dynamics.


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Collaboration in research

There is growing evidence that specifi c actors, even the largest multinational or major research centres, increasingly rely on others to carry out research and innovation. The importance of external sources has been highlighted by many authors, going back to the contributions of Schumpeter (1934). Cutting-edge R&D activities require an ever-growing amount and range of resources and capabilities. Moreover, other authors have argued that the need to collaborate is now met with a wide availability of highly skilled people and companies, making it possible to pursue collaboration with external organizations (Chesbrough, 2003; Chesbrough, Vanhaverbeke, and West, 2006). To borrow from Chesbrough and colleagues, the model for research and innovation at an economy level is becoming more ‘open’. This suggests that actors within these changing systems of innovation must develop the capabilities and strategic vision to collaborate.

Figure 1.1 Integrated model of R&D collaboration

IndustryPublicresearch

AcademiaRegional

governments

Central

governments

Economic environm

ent

Polic

y en

viro

nmen

t

Source: Adapted from Chapter 4.

As pointed out in Figure 1.1, one can conceptualize four types of interaction in R&D collaboration. The fi rst is the interaction that occurs among companies, academic universities, and public research institutes. This type is the most comprehensive mode, as all three


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groups of innovation actors participate in R&D collaboration. Second, there is interaction between academia (universities) and companies. It can be expected that this is the most frequent type of interaction, as it occurs spontaneously and there is substantial evidence of its occurrence over the past decades in many contexts. Third, there is R&D collaboration between universities and public research institutes. This type presupposes the existence of active public (or private) research institutes that play a role different than that of academic universities. Finally, R&D collaboration takes place between industrial and public research institutes, occurring most frequently when the university sector has relatively underdeveloped research capabilities.

The interaction of academia, public research, and industry takes place in an economic and policy environment that, as this study will show, impacts on the collaboration, from both a capability and an opportunity point of view. The economic environment relates to the overall structure of the economy in terms of value added by the economic sector, the average size of enterprises, their export orientation, the degree of foreign investment, and, last but not least, the existence of capital markets with venture capitalists.

The policy environment partially relates to government’s capacity to stimulate academia–industry linkages, which is precisely the objective of this study, but it also includes broader policy frameworks such as science and technology policies, policies for the development of higher education, and economic and employment policies. Among these, fi scal policies may play an important role since they may set incentives for academia and industry to collaborate.

Evolving conceptions of the role of the state in academia–industry partnerships

Governments can organize the interaction of academia and the research sector with industry in different ways, corresponding to broader conceptions of the role of the state in the social system. Government itself needs to be understood as an actor operating at least at both the national and regional levels. In more recent studies of innovation systems, there is an increasing tendency to refer to the concept of the ‘regional


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innovation system’ as a more focused addition to the broader level of analysis captured by the national systems of innovation framework.

The perception of the role of government varies widely, with reference to the underlying political system and the prevailing ideology that goes along with it. In former socialist countries, the state’s central planning approach encompassed academia and industry, and directed the relations between them. This model was perceived to provide little room for ‘bottom-up’ initiatives, and thus appeared to discourage rather than encourage innovation.

Until recently in most industrialized Western countries, academia and industry were seen as forming separate institutional spheres, with strong borders separating them. The role of the state was conceptually limited to addressing problems that could be defi ned as market failures, with solutions that the private sector could not or would not support. Under this model, governments, often through their science councils or other governance bodies, acted as providers of funds for public R&D and as regulators setting the conditions for a favourable environment for R&D in both academia and public research institutes. However, they were not concerned with directly enhancing conditions for technology transfer and innovation, or with funding collaborative projects. Most liberal economies functioned under this model until relatively recently, but are increasingly shifting their attention to new forms of state regulation and intervention.

In recent decades, many Western industrialized countries seem to be experimenting with a more active role of the state as a catalyst for academia–industry partnerships, due to their potential to contribute to national competitiveness (Laursen and Salter, 2004). In this context, the three actors function in overlapping institutional spheres. Each actor can assume parts of the role of the other, and hybrid organizations emerge at the interfaces. In one form or another, most Western industrialized countries and many emerging economies are today introducing new measures, such as targeted science and technology policies. They are also establishing enabling legislative frameworks to secure conditions conducive to innovation. In addition, they are introducing policies, programmes, and incentives intended to directly foster academia–industry relations in both the research and training domains. These


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policies and programmes aim at removing specifi c barriers to innovation and increasing synergies between public and private investment in innovation. In particular, they establish new types of support structures and incentives that concern higher education institutions, research institutes, and enterprises, often simultaneously. Such policies, programmes and incentive measures have four potential aims:

• creating incentives for joint academia–industry R&D activities,• supporting the development of new technology-based fi rms or

spin-offs,• creating a climate and structures for innovation,• creating enabling framework conditions for sustainable academia–

industry partnerships.

1.3 Rationale and focus of this study

The concern with effective national innovation systems has been very strong in OECD countries. More recently, however, national innovation systems have also become an important policy issue in the science and technology policies of emerging economies and countries in transition, some of which have been called ‘catching up economies’ (OECD, 1999; 2002). However, emerging economies are confronted with specifi c challenges and diffi culties. They frequently suffer from lower public and private spending on R&D than more developed countries, which results in lower R&D intensity and a lower share of researchers in the labour force. Overall, the majority of higher education institutions in emerging economies are less involved in research activities, although in some countries the education sector comprises the whole range of institutions, from teaching-only institutes to research universities.

Moreover, in emerging economies, a larger share of enterprises belongs to the small and medium-sized enterprise (SME) sector. Across industry, fi rms more frequently depend on imported technology, as evidenced (at least in proxy) by the technology balance of payments (OECD, 2006a). In addition, multinationals based in emerging economies more commonly import their technology from their home base. Furthermore, domestic enterprises frequently lack the human resources to articulate their technology requirements clearly, which is a precondition for successful collaboration with higher education institutions.


23


From the above challenges of research and innovation in emerging economies, it can be hypothesized that the role of the government is even more important in emerging or transitional economies than in more developed ones. First, since public funding for research is the predominant source of funding, very little R&D can actually take place when the state does not directly fund R&D activities. Second, in most emerging economies, the state is an important organizer of the economic sphere where a larger share of enterprises belongs to the public sphere. Third, national systems of innovation are frequently weak, suffering from the absence of a diversifi ed institutional setting to support innovation at all levels. Fourth, capital markets are relatively weak and the existence of venture capital, which is an important condition to bringing knowledge to bear on production processes, is rarely available in emerging economies.

Most research on the role of governments in the enhancement of academia–industry partnerships has focused on Western industrialized countries. However, many policy-makers in emerging economies are currently looking for policy advice on how to develop a framework that facilitates the development of such partnerships. We thus decided to conduct a case study research project to explore the role and modes of intervention of government in the enhancement of academia–industry partnerships in three countries located in varying development contexts: China (an emerging country); Poland (a country in economic transition); and the Republic of Korea (a newly industrialized country).

The three case countries were chosen because they represent contrasting cases along the state–market continuum, thus showing an interesting variety of changing roles played by government in the regulation of the economic system in general, and science and technology policies in particular. Indeed, China represents a communist country with market initiatives while the Republic of Korea is a market economy with state regulation. Poland has been undergoing the most important changes, as it suddenly moved away from a centrally planned to a market economy.

In China, the central government has retained extensive planning control and infl uence, with signifi cant, albeit localized, forays into the market economy. In particular, the ownership structure of the economy has changed considerably, with a non-public sector contribution to the


24


gross domestic product (GDP) growing very rapidly. At the same time, the Chinese Government has established a strong commitment to the development of its national scientifi c capacity and it is clearly favouring academia–industry partnerships as a tool to bridge the gap between knowledge production and application.

As a market economy with state intervention, the Republic of Korea, a newly industrialized country, represents a clear case where much targeted public investment in science and technology has been tightly linked with industrial policy since the 1960s. Over the years, the Republic of Korea has gained considerable experience in government initiatives for the enhancement of public–private linkages, which have become a crucial element in its economic development strategy.

In Poland, the state has evolved from a strong centrally planned regime to a sudden laissez-faire approach and free market and, more recently, a modest return to state regulation. Through its accession to the European Union (EU), Poland has gained access to new funding sources for research and industry development as well as the prevailing concepts of academia–industry partnerships. However, with regard to the basic characteristics of its innovation system, the country remains relatively traditional, with the major share of R&D being performed by public research organizations and with universities concentrating their efforts on fundamental research.

Putting the three countries into comparative perspective

In order to provide the reader with a more comprehensive framework for a comparative analysis for the reading of the three country case studies, it is necessary to discuss some basic indicators related to their socio-economic development and their basic science and technology systems. The case countries chosen – China, the Republic of Korea, and Poland – also offer contrasting contexts in terms of population, economic structures, and performance, as well as different patterns in the organization of their innovation systems. A fi rst characterization of such patterns can be achieved when looking at overall funding and human capital and their distribution among R&D performance.

With 1.3 billion people in 2005, China is the country with the largest population in the world. The populations of the Republic of


25


Korea and Poland are of medium size, with 48 million people for the fi rst and 38 million for the second in 2005. The overall wealth of the three countries can be measured through per capita gross national income (GNI). Of them, Republic of Korea is the richest, with per capita GNI income at US$15,830, followed by Poland (US$7,110), and China (US$1,740).

Table 1.1 Basic economic indicators, 2005

Populationin millions

Value added as % of GDPby economic sector

GDP per capitagrowth rate 2004/2005

Per capita GNI US$

Agriculture Industry ServicesChina 1,305 13 46 41 9.2 1,740Poland 38 5 31 65 3.3 7,110Republic of Korea

48 4 41 55 3.5 15,830

Source: World Bank, 2006: 288–289, 294–295.

In terms of the structure of the national economy, in 2005, all countries were moving towards a growing service sector, while both agriculture and manufacturing were demonstrating a decreasing contribution to GDP. In China, the primary sector represented 13 per cent of GDP, the secondary sector 46 per cent, and the tertiary sector 41 per cent in 2005. In the Republic of Korea, agriculture represented only 4 per cent, industry 41 per cent, and services 55 per cent. This is somewhat similar to the Polish GDP by sector distribution, with agriculture at 5 per cent, industry at 31 per cent, and services accounting for about 65 per cent of GDP.

All three economies are quite dynamic in their rates of GDP growth, although China in particular has shown an impressive and accelerated GDP growth ranging from 8.3 per cent in 2001 to 9.2 per cent in 2005. The Republic of Korea’s economy is somewhat more stabilized, with moderate GDP growth after the East Asian recession of the late 1990s. More recently, the country has been picking up, with a moderate growth in 2003 of 3.1 per cent, in 2004 of 4.6 per cent, and in 2005 of 3.5 per cent. Poland also experienced a major recession in the late 1980s and during much of the 1990s, after the political breakdown of the socialist regime. However, it has


26


been picking up more recently, following the country’s entry into the EU in 2004, with a developing country’s moderate growth rates of 4.4 per cent in 2003, 5.3 per cent in 2004, and 3.3 per cent in 2005.

In terms of industrial structure, the Republic of Korea has a large and long-established private sector in which large-scale industry has played an historically important role in this market economy. The Polish economic branches are undergoing major restructuring programmes, most of which will be fi nalized by 2010. This means that most formerly public industries will be privatized by that year. The Chinese economy has itself been undergoing major reform, starting with the rural sector in 1979 and the creation of special economic zones to attract foreign investment, and some coastal regions designated as open cities and development zones. Thus, there is now a co-existence of planned and market economies, with most enterprises being publicly owned but increasingly functioning under market conditions.

Table 1.2 shows that the fi nancial commitment of the three case countries to R&D varies considerably. All countries are increasing their commitment, at least in absolute terms. However, the table shows clearly that China’s gross domestic expenditure on R&D (GERD)/GDP ratio is evolving more rapidly than that of the Republic of Korea, while in Poland this indicator is declining. Nonetheless, the Republic of Korea’s contribution to research (2.64 per cent of GERD/GDP in 2004) is far higher than that of the other two countries: double that of China and four times that of Poland. When broken down to the per capita level, this emphasis put by the Republic of Korea on its investment in R&D is even more visible.

Table 1.3 shows the distribution of GERD fi nanced by government and industry as well as the distribution of GERD by the performing sector. This table demonstrates a similar pattern of investment and performance in China and the Republic of Korea, with roughly two thirds of funding coming from industry and two thirds (or more in the case of China) being performed by industry. The role of government as a provider of GERD is particularly important in Poland.


27


Table 1.2 Total gross domestic expenditure on R&D (GERD), 1996–2003

PPP in US$000 As percentage (%) of GDP Per capita (PPP$)1996 China Republic of

KoreaPoland China Republic of

KoreaPoland China Republic of

KoreaPoland

1997 19,919,511 14,038,947 1,978,649 0.60% 2.42% 0.67% 16.2 309.2 51.21998 25,210,372 15,307,931 2,150,449 0.68% 2.48% 0.67% 20.3 334.3 55.61999 28,422,841 13,756,318 2,321,873 0.70% 2.34% 0.68% 22.7 298.1 60.12000 36,204,957 14,621,209 2,536,223 0.83% 2.25% 0.70% 28.6 314.6 65.62001 48,300,013 17,101,694 2,544,003 1.00% 2.39% 0.66% 37.9 365.6 65.82002 57,041,878 19,622,211 2,532,685 1.07% 2.59% 0.64% 44.5 417.1 65.62003 71,339,469 20,777,322 2,371,788 1.22% 2.53% 0.58% 55.2 439.6 61.42004 84,618,281 22,761,539 2,430,960 1.31% 2.64% 0.56% 65.1 479.6 63.0

Source: UNESCO Institute of Statistics: Science, technology and innovation indicators database.Note: PPP = purchasing power parity.

Table 1.3 Basic science and technology indicators: gross domestic expenditure on R&D (GERD) and total number of researchers, 2005

% GERD fi nanced by % GERD performed byIndustry Government Industry Academia Government Total researchers (FTE)

China 67.0 26.3 68.3 9.9 21.8 926,252Poland 30.3 60.7 31.8 31.6 36.4 62,162Republic of Korea 75.0 23.0 76.9 9.9 11.9 179,812OECD average 62.2 30.2 68.0 17.3 12.1 3,550,077*

Source: OECD, 2006b: 1. FTE is full time equivalent. * OECD total researchers (not average).


28


All three countries have been and remain committed to policies that clearly foster human resource development through the higher education sector, including in research training in the science and technology area. This means that trained human resources and R&D workers will be available for recruitment, but need to be able to fi nd suitable roles in the economy. In terms of gross enrolment rates (GER) for tertiary education, China has made the greatest jump in its GER, from 6 per cent in 1999 to 19 per cent in 2004. Poland had already achieved considerable coverage, and moved from 44 to 59 per cent, while the Republic of Korea moved from 66 per cent to 89 per cent in the same period (UNESCO Institute of Statistics, 2006). In terms of educational attainment, data are available from OECD statistics (OECD, 2006a) for Poland and the Republic of Korea. The percentage of the Polish population aged 25–65 years with tertiary education stands at 16 per cent, whereas this population represents as much as 30 per cent in the Republic of Korea.

With regard to the number of R&D personnel, Table 1.4 shows that, in China and the Republic of Korea, the number of R&D personnel is increasing, while numbers are declining in Poland. This decline is most likely due to more attractive employment opportunities both outside the public R&D sector and outside the country. In terms of relative distribution of R&D personnel among the business, government, and higher education sectors (as well as others), there is a notable trend in China for an increase in the share of R&D personnel in the business sector. The situation is similar in the Republic of Korea, where this share is already close to 70 per cent, while the share of R&D personnel in the business sector in Poland declined from 28.2 per cent in 1993 to 14.8 per cent in 2003.

The comparative approach and structure of this publication

The comparative approach of this study was chosen with an underlying expectation that different levels of state intervention in a country’s economic system would be refl ected in different approaches and levels of intervention in its national innovation system, in general, and in its government’s public policy for academia–industry partnerships, in particular. Looking at country case studies in a comparative fashion with


29


an evolutionary perspective was also expected to provide insights into the changes that have occurred in this domain over recent decades.

The study attempts to pay particular attention to the question of whether it is more effective for government to be a ‘planner’, a

Table 1.4 Human capital in science, technology, and innovation, 1996–2003

R&D personnelFull time

equivalentShare of R&D personnel by sector of employment (FTE)

Year Total Businessenterprise

Government Highereducation

Privatenon-profi t/Other

China 1996 804,000 46.9% 28.9% 18.4% 5.9%1997 831,200 43.5% 30.7% 19.9% 5.9%1998 755,200 41.0% 30.2% 22.4% 6.5%1999 821,700 42.7% 28.5% 21.4% 7.4%2000 922,131 52.1% 30.6% 17.3% ...2001 956,500 55.6% 26.5% 17.9% ...2002 1,035,197 58.1% 24.4% 17.5% ...2003 1,094,831 59.9% 22.8% 17.3% ...

Poland 1996 83,348 28.2% 24.9% 46.8% 0.0%1997 83,803 27.7% 23.4% 48.9% ...1998 84,510 25.9% 23.8% 50.3% 0.0%1999 82,368 24.7% 23.2% 52.1% 0.0%2000 78,925 23.5% 23.8% 52.6% 0.0%2001 78,027 22.1% 22.4% 55.3% 0.1%2002 76,214 11.2% 31.3% 57.4% 0.1%2003 77,040 14.8% 27.4% 57.7% 0.1%

Rep. of Korea 1996 135,703 65.6% 12.1% 20.8% 1.5%1997 136,559 66.2% 11.7% 20.9% 1.2%1998 128,669 60.5% 11.5% 27.0% 1.0%1999 137,874 61.0% 11.1% 26.5% 1.4%2000 138,077 63.1% 9.5% 26.2% 1.1%2001 165,715 70.6% 8.9% 19.6% 0.9%2002 172,270 70.1% 8.1% 20.6% 1.2%2003 186,214 69.0% 8.0% 21.9% 1.2%

Source: UNESCO Institute of Statistics: Science, technology and innovation indicators database.


30


‘regulator’, or a ‘facilitator’. Such an analysis obviously needs to be sensitive to the context in which academia–industry linkages take place. With regard to these linkages, the specifi c question arises as to whether government’s relatively larger role in the economy allows for a more effective intervention to balance out the relatively low intensity of R&D activities in the industry sector, which itself contributes to a lack of absorptive capacity for knowledge within the economic base.

Comparative analysis is known for its potential to shed light on the importance of contextual factors that could have been overlooked when looking at one system only. But it is also known for the diffi culties involved when fi ndings need to be interpreted and results generalized across national boundaries.

With this in mind, we have decided to include under Chapters II, III, and IV the three country case studies in this publication so that the reader can draw directly from the knowledge of the case study authors from China, Poland, and the Republic of Korea. The case studies attempt to contextualize public policy in the area of academia–industry partnerships through a discussion of the national economic system. Placing such partnerships within the broader framework of the national innovation system allows for discussion of the characteristics of the innovation actors, that is the research base and the industry sector separately, before proceeding to an analysis of government policies, programmes, and legal frameworks meant to stimulate their interaction. Each case study then makes an analysis of the effectiveness of government intervention and thus gives important insights into the factors that are behind the success or failure of such action.

Chapter V of this publication includes a comparative analysis of the three case studies. This comparative analysis provides a clear picture of three contrasting approaches developed by government for the organization of academia–industry partnerships, which can be characterized as planning, substitution, and orchestration. In order to create a better understanding of the characteristics of each innovation actor, the evolution and current characteristics of both the research base (research organizations and universities) and fi rms are discussed from a comparative perspective.


31


Finally, Chapter V draws lessons for academia–industry linkages in developing economies. The study brings to the fore that the most important issue concerns the process of government intervention and the sequencing of its action. This comparative study does not provide a ready-made blueprint for such a process, but it draws policy-makers’ attention to some of the main issues to be considered when designing one.


33

II. ACADEMIA–INDUSTRY–GOVERNMENT INTERACTION: THE CASE OF CHINA

Lan Xue and Ling Zhou

2.1 Introduction

In recent years, the rise of the knowledge economy has led to the recognition that technological innovation plays an essential role in economic development. The concept of an ‘innovation system’ has been adopted to explain mechanisms of knowledge creation and dissemination at the national, regional, and sectoral levels (Freeman, 1987; Lundvall, 1992, Nelson, 1993; Saxenian, 1994; Edquist and Lundvall, 1997; Breschi and Malerba, 1997). These studies focus primarily on the roles of different actors involved in innovative activities and the interaction between them. In particular, many have focused on the new roles universities play in national innovation systems and their linkages to industry in fulfi lling these roles.

While the innovation system approach presents a useful framework for examining the role of universities from an institutional perspective, most of these studies are based on the experience of industrialized countries. In recent years, researchers have begun to consider how these issues unfold in developing countries such as China. However, comprehensive and systematic descriptions of the whole system remain absent. The Chinese experience is interesting not only because China is a large developing country, but also because it is moving towards a market economy with a centralized innovation system in transition. The academia–market linkage in China offers a unique case to study the evolving institutional relationships between academia and industry, since China’s innovation system has experienced dramatic change over the last two decades. The development of university–market linkages in China has been greatly infl uenced and conditioned by such change.

In addition, as the trend of science and technology globalization continues, academic communities in developing countries will increasingly become important partners in a global innovation system. The academia–market interface in developing countries such as China


34


therefore matters not only because such experience can shed new light on the ongoing debate, but also because the evolution of such a relationship will also have an impact on the interlinked global innovation system.

This chapter focuses on the evolution of university–market–government linkages in China. The next section briefl y introduces China’s economy as a system in transition and gives a basic description of the country’s economic reform, the current landscape of its economy, problems, and relevant policies. The third section will give a brief account of the linkages between university and the market, followed by summaries of China’s higher educational system reforms, the changing role of universities in its national innovation system, as well as R&D activities in universities and their relationship with other innovative entities. The fourth section will present an analysis of forms of university–market linkages in China, such as contract research and incubation services, based on recent data collected by the Ministry of Education. The chapter will then focus on the evolution and reform of China’s national innovation system and the lack of fundamental reform in its higher educational system, as the general backdrop of Chinese universities’ interaction with the market. The fi fth section will provide a review of government policies and various programmes aimed at promoting innovation. Finally, the implications of the current university-market linkages for the overall Chinese innovation system will be explored.

2.2 China’s economy: a system in transition

Since the beginning of economic reform in 1978, China has become one of the world’s fastest-growing economies. For the past quarter of a century, China’s real annual GDP has averaged around 9.7 per cent (from 1979 to 2005) and per capita income has quintupled (from US$220 in 1980 to US$1,100 in 2003). According to China’s central bank, the country’s GDP rose by 10.7 per cent in 2006 to reach 20,940.7 billion2 yuan. Never before have so many people been lifted out of poverty in such a short period of time. The fraction of the Chinese population living on less than US$1 a day fell from 63.8 per cent in 1981 to 16.6 per cent 20 years later (Stiglitz, 2006). Many economists speculate that China

2. In this case study, the term ‘billion’ means a thousand million.


35

Academia–industry–government interaction: the case of China

could become the world’s largest economy at some point in the near future, provided that the government is able to continue and deepen economic reforms, particularly with regard to its ineffi cient state-owned enterprises and state banking system. Progress in reforming these sectors in recent years has been somewhat mixed (Morrison, 2004).

After 15 years of diffi cult negotiations, China became a member of the World Trade Organization (WTO) on 11 December 2001. Over the next fi ve years, the country signifi cantly reduced a wide range of tariff and non-tariff barriers in accordance with its WTO entry commitments. Nearly all sectors of China’s economy (including agriculture, manufacturing, and services) have been subject to greater competition, particularly those that were previously better-protected industries, such as car manufacturing and certain agricultural sectors. Other labour-intensive industries, in particular textiles and apparel, have benefi ted from China’s WTO accession.

Basic description of China’s economic reform

Prior to 1978, when China’s economic reform began, the Chinese economy was based on a centrally planned system. A large share of the country’s economic output was directed and controlled by the state, which set production goals, controlled prices, and allocated resources throughout most of the economy. During the 1950s, almost all of China’s individual household farms were collectivized into large communes. To support rapid industrialization during the 1960s and 1970s, the central government made large-scale investments in physical and human capital. As a result, by 1978 nearly three-quarters of industrial production was

produced by centrally controlled state-owned enterprises according to centrally planned output targets. Private enterprises and foreign invested fi rms were nearly nonexistent. A central goal of the Chinese Government was to make China’s economy relatively self-suffi cient. Foreign trade was generally limited to obtaining only those goods that could not be made or obtained in China (Morrison, 2004: 6).

Under such a planned system, the Chinese economy was relatively stagnant and ineffi cient because of a lack of market-oriented incentives. There was little competition among fi rms and farmers. Price distortions were prevalent in the economy because of state control. Living standards were substantially lower than the world’s average level.


36


In 1978, the central government made a critical decision to reform the economic system, starting with the rural sector. Price and ownership incentives were initiated for farmers, who could begin to sell a portion of their crops on the free market. In order to attract overseas investment and boost exports, as well as to import high-technology products, the government established four special economic zones. Then the government designated additional coastal regions and cities as open development zones. All these places could enjoy the experimental reforms of the free market and attract overseas investors by offering favourable tax and trading policies. Since then, entities that could trade on the market have been largely diversifi ed, including privately owned enterprises, joint ventures, and transnational companies. In addition, economic control over state-owned enterprises has also been decentralized to local governments, which can now operate and compete freely, rather than under the direction and guidance of state planning. Meanwhile, relevant reforms that sought to decentralize economic policy-making in several economic sectors have also helped eliminate controls over price and trade.

The reform process was marked by three major milestones, each of which marked a new phase of the process with relevant policies and principles. This has been a step-by-step process, building carefully on previous circumstances and achievements, and using experimentation and learning along the way (Stern, 2001; Morrison, 2004; Su, 2004; Yao, 2003; Shaun 2004).

The fi rst milestone was in December 1978, when the Third Plenary Session of the 11th Central Committee of the Chinese Communist Party (CPC) decided to initiate economic reform. Relevant reform policies and procedures were set up following the principle of ‘taking the planned economy as the mainstay and market regulation as a supplement’ (CCCPC, 1982). The major reforms were in the agriculture sector, with the household responsibility system. This resulted in dramatic increases in agricultural output and productivity that brought at least 100 million people – and probably more – out of poverty. It was one of the most successful reforms in economic history, and also a very radical reform with very quick results (Stern, 2001).


37


The second milestone was in 1984, when the Third Plenary Session of the 12th Central Committee of the CPC created the term ‘planned commodity economy’. The decision at that time explicitly stated that ‘the socialist economy is a planned commodity economy based on public ownership. The full development of a commodity economy is an inevitable phase for social and economic development’ (CCCPC, 1984). Albeit contradictory, the term actually indicated a ‘dual track system’ in which both the planned and market economy co-existed, and where reform was regarded as a gradual process. This second phase was characterized by a period of very strong growth in township and village enterprises.

In both reform phases, the key elements were removing constraints on entrepreneurship and providing a friendlier environment for enterprises. The productive energies released had a dramatic effect, thanks in part to other policies that can be described as permissive. Financial policy was an example, with banking institutions preparing to provide loans to township and village enterprises (Yao, 1997b; Stern, 2001). Social support policies through state enterprises are another example that permitted many people or families to have some kind of guaranteed income or other forms of social protection. Many activities in state enterprises were ineffi cient. However, they did provide some social security, which allowed people to take some risks in engaging in new activities (Yao, 1997b).

After Deng Xiaoping’s southern China tour in 1992, the 14th National Congress explicitly prescribed that ‘the general objective for China’s economic restructuring was to establish a socialist system of market economy’ (CCCPC, 1992). This marked the beginning of the third phase of economic reform. In Deng Xiaoping’s words: the proportion of planning to market forces is not the essential

difference between socialism and capitalism. A planned economy is not equivalent to socialism, because there is also planning under capitalism; a market economy is not capitalism, because there are markets under socialism too. Plan and market forces are both means of controlling economic activity (Deng Xiaoping, 1993: 373).


38


This phase of the reform involved three elements:

• the deepening of markets, that is, the strengthening of institutions supporting a market economy;

• the integration of China into the world economy; • the maintenance of social cohesion, which was a fundamental part

of the fi rst two phases of the reforms (Stern, 2001; Su, 2004).

In 2003, the Chinese Government proposed to push forward China’s economic and social development following a ‘scientifi c approach’. This meant a more balanced approach between economic and social objectives, between economic development and environmental protection, between different regions, between urban and rural areas, and between domestic and international markets. In order to implement this policy, the government set out to further improve the business environment and promote the development of enterprises of various ownership, to deepen agricultural and rural reform, to better regulate the market and maintain macroeconomic stability, to reform the public fi nance system and banking system, to increase the quality of international trade, to build a social safety net, and to improve the legal and administrative infrastructure for the better performance of the market (CCCPC, 2003).

The current landscape of China’s economy

Overall economic development

Over the past two decades, China’s GDP has experienced high-speed development, reaching 18,232.1 billion yuan in 2005,3 over 50 times the fi gure of 1978. During the 10th Five-Year Period in particular (Figure 2.1), GDP has maintained an average annual growth rate of over 9.4 per cent, that is, 6.1 per cent more than the world’s average level.

Reforms have been carried out in the economic structures. Changes in the industrial structure have been accelerated, in particular

3. According to fi gures released by the National Statistics Bureau on 22 January 2007, China’s GDP of 2005 was readjusted to 18386.8 billion yuan. However, the paper will continue to use the number of 18,232.1 billion yuan issued at the beginning of 2006 when this research was done, to maintain consistency with all other numbers also mentioned in the paper.


39


since 1989. Great efforts have been made to expand the service sector while maintaining a strong manufacturing sector. The contribution of agriculture to GDP has witnessed a reasonable decrease in recent decades, while the contributions of manufacturing and services have witnessed a steady increase.

Figure 2.1 GDP during the 10th Five-Year Period and growth rate (unit: 100 million yuan, %)

2001 2002 2003 2004 2005

200,000180,000160,000140,000120,000100,00080,00060,00040,00020,000

0

12%

10%

8%

6%

4%

2%

0%

8,30%9.10%

109.655 120,333125,823

10% 159,878 182,321

10.14% 9.90%

GDP Year-on-year growth

Source: China, 2007f.

As Figure 2.2 shows, compared with 1978 and 1989, the contribution of agriculture to GDP in 2001 had decreased by 12.3 and 9.2 per cent respectively. Meanwhile, manufacturing increased by 1.9 and 7.1 per cent respectively, and services by 10.4 and 2.1 per cent. Overall, the contribution of the primary, secondary, and tertiary sectors to China’s GDP has changed from 28.1 per cent, 48.2 per cent, 23.7 per cent in 1978, to 25 per cent, 43 per cent, 32 per cent in 1989, and again to 12.4 per cent, 47.3 per cent, 40.3 per cent in 2005. The stable development of the manufacturing and services sectors has helped to provide more job opportunities to absorb surplus labour from the agriculture sector.

Meanwhile, ownership structure has also been changed substantially, with government encouraging the development of private ownership. In 1978, public ownership contributed 99.1 per cent of


40


GDP, decreasing to 75.8 per cent in 1997. During the same period, the proportion contributed to GDP by the private sector increased by 23.3 per cent. According to the most recent data, the private sector of the economy accounted for 65 per cent of GDP in 2005 (Su and Zou, 2006). While the private sector is increasingly boosting China’s economy, the state-owned sector maintains its dominant position in ‘strategic’ industries such as energy and infrastructure.

Figure 2.2 Industrial structure of China in selected years (%)

2005

2004

2003

2002

2001

1989

1978

0% 20% 40% 60% 80% 100%

12.4 47.3 40.3

15.2 52.9 31.9

14.4 52.2 33.4

15.3 50.4 34.3

15.8 50.4 34.1

25 43 32

28.1 48.2 23.7

primary/agriculture

secondary/manufacturing

tertiary/services

Source: www.stats.gov.cn. Note: The increase of the percentage of services from 31.9 per cent in 2004 to 40.3 per cent in 2005 was mainly due to a statistical adjustment.

By the end of 2006, the total population of China exceeded 1.315 billion – up about 5.9 per cent from 2005. In the past decade, the natural growth of China’s population has tended to decrease yearly.

All of the above shows that much progress has been made in the Chinese people’s lives. However, problems persist, such as the widening of income disparities between urban and rural areas, between advanced and less advanced regions, and between the rich and poor within regions; the incomprehensive social guarantee system; and challenges to environmental protection and sustainable development imposed by the rapid industrialization process.


http://www.stats.gov.cn

41


Education, science, and technology

China has made tremendous progress in education, with a succession of decisions to carry out reforms as well as to clarify their missions and basic policies. By the end of 2000, over 85 per cent of the population had completed compulsory nine-year education, with the junior middle school entrance rate reaching 85 per cent and a primary school entrance rate of 99 per cent. The illiteracy rate of young people is now lower than 5 per cent.

The higher education sector in China has also witnessed rapid growth since the late 1990s (Figure 2.3). In 2005, the gross entrance rate for tertiary education reached 21 per cent, compared with a rate of 3.4 per cent in 1990. Moreover, the total number of postgraduates in 2005 exceeded 978,600 (www.edu.cn). Along with this expansion, the government implemented some important reforms. First, the administration of many universities was delegated to local governments from the ministries abolished in the 1998 government reform. Second, there were many ‘mergers and acquisitions’ among universities that have reshaped the landscape of the Chinese higher education system. By 2002, 637 universities were merged to create 270 new universities. In addition, 317 universities signed cooperative agreements to form 270 learning conglomerates.

China spent 432.89 billion yuan on the fi eld of science and technology in 2004, over six times that spent in 1993 (when science and technology spending stood at only 68.58 billion yuan). Meanwhile, GERD has also witnessed rapid growth in the past few years, with the percentage of GERD to GDP reaching 1.23 per cent in 2004 (Figure 2.4).

At the same time, as the scale of the science and technology workforce has expanded, the general quality of researchers has also improved substantially. In 2004, the number of science and technology personnel stood at over 3.48 million, with scientists and engineers representing more than 2.25 million, an increase of 42.04 per cent and 65.44 per cent respectively from 1993 (Figure 2.5).


http://www.edu.cn

42


Figure 2.3 Higher education funds as a proportion of GDP (1999–2003) (units: billion yuan, %)

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

1.60%

1.40%

1.20%

1.00%

0.80%

0.60%

0.40%

0.20%

0.00%

9,186.5

0.83%

76.5

1999 2000 2001 2002 2003

98.3 124.7 158.3 187.3

0.99%

1.14% 1.32%

1.38%

9,921.5

10,965.5

12,033.3 13,582.3

Higher education funds Higher education funds/GDPGDP

Source: www.stats.gov.cn and www.sts.org.cn

Figure 2.4 GERD as a proportion of GDP (2000–2004)(units: billion yuan, %)

20,000

15,000

10,000

5,000

0

1.40%

1.20%

1.00%

0.80%

0.60%

0.40%

0.20%

0.00%

0.95%

1.07%

1.13% 1.23%

89.57 104.25 128.76 153.96

10,965.5

12,033.313,582.3 15,987.8

2000 2001 2002 2003 2004

GERD/GDPGDP GERD

9,121.50.90%

196.66




http://www.sts.org.cn



43


Figure 2.5 Scientists and engineers as a proportion of S&T personnel (units: million people, %)

4

3

2

1

0

80%

60%

40%

20%

0%

55.51%63.66%

2.45

1.36

3.22

2.05 2.072.17 2.26 2.25

3.14 3.22 3.28 3.4865.92% 67.39% 68.90% 64.66%

1993 20012000 2002 2003 2004

S&T personnel Scientists and engineersScientists and engineers/S&T personnel

Source: www.stats.gov.cn

Similarly, in 2004 (Figure 2.6), over 1.15 million people were engaged in R&D work in China, compared with about 0.97 million in Russia, 0.9 million in Japan, and 0.48 million in Germany. Of these, 0.93 million were scientists and engineers, a fi gure second only to the USA, with 1.26 million. While the scale is impressive, the overall quality of the labour force measured by the share of R&D workers in the total labour force in China is still very low compared with other countries. As shown in Figure 2.6, there were about 15 people engaged in R&D work for every 10,000 members of the labour force in China, as opposed to 100 people in most industrialized countries.

As a result of the increase in science and technology investment, the number of science and technology publications in China and abroad has increased each year (Figure 2.7).

The rapid increase in basic research has helped China to catch up with international science and technology frontiers. Among related articles being catalogued by SCI (Science Citation Index), ISTP (Index to Science and Technical Proceedings), and EI (Engineering Index), the total number of Chinese articles was 111,356 in 2004, making China the fi fth largest producer of science and technology articles that year (Figure 2.8).



44


Figure 2.6 R&D personnel in selected countries

1,400

1,200

1,000

800

600

400

200

0

160

140

120

80

60

40

20

0

1,152.6132

882.4

480

15

China2004

Japan2003

Germany2003

France2002

Canada2002

Italy2002

Russia2003

Korea2003

122 127

107

135973.4

186.2164177.1

343.7

98

R&D personnel per 10,000 labour forceR&D personnelin thousands

81

Source: www.sts.org.cn

Figure 2.7 National science and technology publications (1994–2004) (units: 1,000 articles)


350

300

250200

150100

50

0

Published in domestic journalsCatalogued by SCI, ISTP, and EI

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

107.3 108 116.2 120.9133.3 162.8

203.2240.1

310

111.493.464.546.2 49.3

24.6 26.4 27.6 3333.377.4

274.4

180.8




45


Figure 2.8 Science and technology papers of selected countries catalogued by SCI, EI, and ISTP as a whole in 2004 (units: articles, %, rank)

600,000

500,000

400,000

300,000

200,000

100,000

0

35%

30%

25%

20%

15%

10%

5%

0%

29,55%520,297

134,685

111,356 123,369 65,25634,348

40,36967,79082,891

138,9957.65%

6.32% 7.89% 7.01%4.71%

3.85% 2.29%5 1 2 3 4 6 7 8 1 1

China

USAJap

an UK

Germany

France

Italy

Canada

Russia

India

1.95%

Percentage of the world totalArticles Rank


The 11th Five-Year Plan, passed by the People’s Congress in March 2006, provided both a vision and a grand strategy for China’s development over the next fi ve years. One of the Plan’s distinctive aspects is its balanced approach to development, meaning that the vision of the economy underlying China’s 11th Five-Year Plan is one of social development, rather than focusing merely on an increase in GDP. In this Plan, China has once again made clear that it seeks sustainable and more equitable increases in real living standards. Other highlights of the Plan include:

• Technological innovation: In the 11th Five-Year Plan, China has also proposed to encourage indigenous innovation as a major strategy to achieve its economic and social goals. China has recognized that what separates less developed from more developed countries is not only a gap in resources, but also a gap in knowledge. In a national Medium and Long-Range Science and



46


Technology Plan completed in early 2006, China outlined a set of measures that attempt not only to reduce the knowledge gaps between China’s science and technology community and that of the rest of the world, but also to encourage indigenous innovation.

• The environment and natural resources: China’s economic growth over the past two decades was achieved with a heavy toll on the environment. The country’s growing population and future economic growth will put further pressure on the environment and natural resources. The 11th Five-Year Plan has taken this message to heart and proposes objectives that, for the fi rst time in China’s planning history, aim to increase energy and resource effi ciencies and limit pollution.

• Institutional reform: The 11th Five-Year Plan recognizes that one of the government’s main responsibilities is to establish an institutional infrastructure that will permit a market economy to function well. It is even more important for China to have strong and enforceable laws that address the problems of corporate governance. In addition, administration has been identifi ed as a major area for reform. A transparent, effi cient, and responsive government is a prerequisite for the successful implementation of the 11th Five-year Plan (CCCPC, 2005; Stiglitz, 2006).

2.3 Universities in China’s national innovation system

Reforms in China’s higher education system

Shortly after the People’s Republic of China was founded in 1949, a new educational system was directly imported: the Soviet model. However, this model did very little to address the problem of mass illiteracy that existed in China at that time. By 1956, still less than half of the age cohort attended primary and secondary school. In the 1950s, most of the government’s efforts were devoted to the development and restructuring of higher education. A so-called ‘traditional higher education system’ of New China was formed during this period.

As a result of restructuring, the number of comprehensive universities diminished, while the number of specialized colleges showed a signifi cant increase. The newly created Ministry of Higher Education was given a stronger role in overseeing the administration of both China’s comprehensive and polytechnic universities as well


47


as its teacher-training institutions, which made up the main parts of this traditional system. In addition, numerous colleges directly under the supervision of different government ministries were also established, focusing mainly on training talents for relevant social sectors, which limited the knowledge scope of those colleges greatly (World Bank, 1998).

Beginning at the end of the 1980s, universities in China entered a new era of large-scale readjustment, cooperation, and merging. From 1994 to 1998, the total number of universities in China decreased from 627 to 590; the average number of students per college increased from 2,591 to 3,335; the ratio of teachers to students increased from 8.8 to 11.601; and the number of comprehensive universities also increased signifi cantly (Shao, 2002).

Administrative rights were largely transferred back to universities over time. In 1999, a decision was made to encourage the further adjustment of the higher education administrative system. With the exception of those universities directly under the supervision of certain government departments such as the Ministry of Education, Ministry of Foreign Affairs, Ministry of Public Security, and the State Sport General Administration, the majority of universities were given independent administration rights (State Council, 1999).

In the traditional higher educational system, government was the only funding channel for universities. During the process of adjustment, more parties were encouraged to invest in higher education. Government funds remain, however, the dominant share.

Meanwhile, reforms have also been carried out in the administrative systems, in areas such as enrolment, employment, and tuition. The new model of China’s higher education system is in the process of formation.

The traditional role of universities in China’s national innovation system

The national innovation system of New China began to take shape in the 1950s. As mentioned above, it was directly adopted from the Soviet model, which emphasized centralized management and planning, with government playing a major role:

• as the sole source of fi nancial support for research work;


48


• as a ‘grand master’ defi ning the division of labour among different institutional players, project planning and execution, direct supervision over research institutes, and unifi ed deployment of research resources;

• as the pivot for the knowledge fl ows among different research entities (Figure 2.9; Feng, 1999).

Figure 2.9 China’s national innovation system and universities since the 1950s

Under such a model, R&D work had been undertaken by a research network composed of the Chinese Academy of Science (CAS) and a number of research institutes directly under the supervision of central government, different ministries, and local governments, with projects and funds being directly deployed by the government. The pillar of this research network, the CAS, was founded in December 1949, bringing together the Central Research Institute and the Peking Research Institute. In the early years of its operation, the CAS also took on such administrative responsibilities as providing guidelines for research activities, and drafting and executing the national science research plans. Although it was later relieved of these administrative responsibilities, this independent research network, in which the CAS

Localgovernment

Central government

Researchinstitutes

ChineseAcademyof Science

Other researchinstitutes

directly undercentral government

MinistriesMinistry of

Higher Education

Researchinstitutes

directly underministries

Research system

Postgraduate education

Higher education system

Employment

Universities

Universities directly under

Education Ministry


49


serves as the core force, has always been the dominant player in China’s science and technology activities such as basic research and technology development (CAS, 1949–1954).

As mentioned above, universities at this time were mainly set up to train talents for other sectors. While resources for all types of research came under the authority of the above-mentioned research institutes, Chinese policy between 1950 and 1955 re-emphasized the higher education system’s teaching function; as a result, universities’ research function was further reduced. Ever since then, the only tie between universities and research institutes has been that research institutes accepted graduates from universities. At the same time, the industrial sector did not take up research responsibilities, nor did it connect with the research network directly. Its connection with universities was also limited to acceptance of graduates, and its interaction with the research system was under the guidance of government.

The reason that China chose to adopt the centralized model in the 1950s was closely related to the fact that its national economic system was also centralized. In addition, the country had little technical infrastructure at the time, and was in dire need of development in many technological fi elds. Only when research resources were pulled together could the country make the best use of available resources in its technology development, thus further boosting economic growth (State Science and Technology Commission, SSTC, 1986).

The transition of China’s national innovation system and the changing role of universities

Beginning in 1978, China’s national innovation system entered a new era with the introduction of a series of institutional reforms, the establishment of the technology market and its further development with a range of laws on patents and technology contracts, and the successful enactment of laws on technology transfer (Section 2.5). Meanwhile, another important step was the 1979 regulation that explicitly prescribed universities as centres for both teaching and scientifi c research. This marked universities’ formal entrance into China’s national science research system (Li and Zeng, 2000).


50


Great changes also occurred in research institutes, which were originally the only players in China’s R&D activities. Public research institutes (PRIs) in China prior to the reform can be divided into three groups (all fi gures are 1985 statistics from the SSTC, 1986). The fi rst group is made up of the 122 research institutes affi liated with and administrated by CAS. Each of these institutes specializes in a particular fi eld, such as physics, mathematics, semiconductors, and chemistry. In 1985, these institutes employed close to 60,000 research staff. Research institutes under CAS were engaged in a wide spectrum of activities including basic and applied research, development, design, and other science and technology services.

The second group of PRIs is made up of research institutes and facilities under China’s national ministries. In 1985, there were 622 state-level research institutes administered by more than 50 ministries and commissions, and employing just over 200,000 researchers. Most of these were engaged in various R&D activities, with an emphasis on the experimental and development work required by their particular industry.

The third group consists of research institutes and facilities subordinated to the government at the provincial level. In 1985, 3,946 provincial research institutes employed more than 310,000 researchers providing services in R&D, engineering design, and technology transfer.

As one of the objects of China’s 1985 resolution on the reform of the science and technology system, the internal management of PRIs changed drastically. In April 1986, the State Council issued temporary provisions on extending the decision-making power of research units (SSTC, 1986), granting PRIs far greater autonomy in areas such as personnel, fi nance, property management, and international exchanges.

Not until late 1992, however, was the contract responsibility system, already widely used in industrial enterprises and in some PRIs, formally introduced in technology development PRIs. Under this new system, the director of a PRI could sign a contract with the state and take responsibility for achieving certain goals in research, income, assets, and other areas within a period of three or more years. In return, the


51


director was allowed to exercise greater control over the PRI and receive a reward, agreed mutually when the contract was successfully fulfi lled.

Such contracts turned out to be far more diffi cult to implement in research institutions than in industrial enterprises. In December 1993, the SSTC, together with the Ministries of Personnel and Treasury, therefore issued another document specifying what research and fi nancial indicators should be used in such contracts. The contract system also started to be adopted by PRIs engaged in basic and public interest research at the level of research divisions or projects within a PRI. By the end of 1993, about 71 per cent of PRIs had implemented the R&D contract system at the level of either a research institute or research projects (SSTC, 1994).

In terms of the reform on institutional structure, the government moved carefully to avoid forcing drastic changes to the existing institutional structure due to the complexity and diffi culty of the issues involved (Zhao, 1986). For the fi rst few years after the 1985 resolution, SSTC issued only one document on how to manage the operating cost of PRIs merged into state-owned enterprises. At the same time, various government-initiated national science and technology programmes (Section 2.5) created many opportunities for PRIs to foster horizontal linkages with other sectors of the economy. In addition, the government encouraged the continuing growth of technical enterprises, many of which were spin-offs from PRIs or universities. These enterprises typically offered their products or services in the growing high-tech market. In the 1990s, the government had encouraged mergers and acquisitions between applied PRIs and technical enterprises to form new enterprises with strong R&D centres or new PRIs with strong applications branches.

The previous policies were all market-oriented, which also generated concerns about a negative impact on academic research. To balance this out, the government initiated a major national research programme called the Knowledge Innovation Programme (KIP), which focused support on CAS to enable it to regain its strength in basic and strategic research. A unique government initiative, KIP is a reform and funding programme targeted at the research institutes in CAS.


52


In order to promote national capability in science and technology innovation in a comprehensive fashion, the government approved a proposal submitted by CAS in 1998 to initiate a pilot project to strengthen China’s KIP in CAS research institutes. The programme would transform CAS into a research institution with a fl exible management system and much improved innovative capacities. The programme consists of three phases: the Initial Phase (1998–2000), the All-Round Implementation Phase (2001–2005), and the Optimization Phase (2006–2010). This initiated a new era for CAS’s development, as well as a new stage in the evolution of the national knowledge innovation system. At the same time, the government also made appropriate restructuring efforts in other kinds of research institutes, with the intention of generating a more fl exible operating mechanism and more powerful innovative capacities (www.cas.ac.cn).

In 1999, the Ministry of Science and Technology (MOST), and the Economic and Trade Commission announced restructuring plans for 242 PRIs, followed by plans for another 664 PRIs. These restructuring plans included merging PRIs into existing companies, reorganizing them into companies, or turning them into non-profi t research institutes to which government would no longer provide guaranteed fi nancial support. Although only 14 per cent of all PRIs were restructured, their share of research funding and human resources constituted almost a quarter of the total (Science and Technology Statistics, 1999). Reforms of research institutes were then further accelerated. By the end of 2002, 1,185 applied research institutes had completed the restructuring programme or were in the process of being restructured. These efforts helped to strengthen China’s industrial R&D capability and fostered better linkages between PRIs and industry.

Thanks to these reform initiatives, China’s national innovation system has changed fundamentally. Government-affi liated research institutes are no longer the only major players in the nation’s research system; both universities and the industrial sector have also become signifi cant actors. Recently, another new phenomenon has begun to emerge. After the government decided to encourage the development of the private economic sector, both non-profi t and private research institutes, restructured on the basis of the former government-affi liated research institutes, have appeared. Meanwhile, private universities have


http://www.cas.ac.cn

53


also been set up, particularly with the passing of a law on promoting private education in 2003. Although these newly emerged organizations comprise only a small proportion of the nation’s total number and private universities are not involved in research activities at all, their establishment will defi nitely help accelerate reforms in China’s research system.

In this transitional period, China’s universities have shown their great potential in knowledge innovation and the commercialization of high-tech research. They have become a major force in China’s knowledge production activities. In 2004, over 437,000 researchers were involved in science and technology work in universities: that is 12.55 per cent of the national total. In the nation’s R&D expenditure on basic research, universities accounted for 40.6 per cent. Meanwhile, among the papers being published domestically, universities accounted for 64.4 per cent (www.stats.gov.cn). All of this shows that the capacities of universities in China’s national innovation system have greatly improved.

Meanwhile, the relationship between universities and other players in the national innovation system has also changed. Universities are cooperating more closely with the industrial sector and research institutes, and the means for them to interact with each other have diversifi ed greatly to include joint research, human resource training, and personnel exchange programmes (Figure 2.10; Shao, 2002).

In the current stage of reform, universities are not only designated as places for teaching and training, they are the main institutions responsible for the production and application of knowledge. Meanwhile, the border between universities and the industrial sector is becoming more ambiguous: on the one hand, universities are directly participating in economic activities that are benefi cial to society; on the other hand, enterprises are beginning to set up private universities in order to expand business in the higher education system.4 These trends have shown that the government’s power over research entities has been largely decentralized and that universities have obtained more autonomy in research and development activities.

4. For example, Jili Auto Group in Zhejiang Province set up Jili University in Beijing.



54


Figure 2.10 Innovation entities in China’s current national innovation system

The university and industrial sectors

Universities and colleges in China work closely with the industrial sector in science and technology activities. Figure 2.11 shows that the industrial sector has been the second largest source of science and technology funding for universities, providing nearly 38 per cent of total funding to universities in 2004.

Local government

Central government

Researchinstitutes

ChineseAcademy

of Science

Research institutes

directly undercentral

government

MinistriesMinistry of Education

Researchinstitutes

directly underministries

Government-affiliated research institutesUniversities

Employment

UniversitiesUniversities

directly underEducationMinistry

Enterprises

University-ownedenterprises

Industrial sector

Employment

University of Science and

Technologyof China

Joint research

Joint research

Joint research

Government

Institute-affiliated enterprises

Joint research


55


Figure 2.11 Science and technology funding to universities and colleges by source of funds

454035302520151050

70%

60%

50%

40%

30%

20%

10%

0%

58.45%

2000 2001 2002 2003 2004

54.90% 55.43% 53.54%

36.58%36.17%36.25%33.27%16.68

2024.77

30.78

39.16

Self-raised funds by enterprises

Funding for S&T activities Government appropriation funds

37.95%

53.78%

billion yuan


The development of ties between universities and colleges, and industry can be traced back to the reform in the 1980s, when the new Chinese national innovation system began to take shape. For historical reasons, Chinese enterprises at the time had acute shortages of research resources coupled with backward technologies and equipment, resulting in their weak capacities in innovation. In 1999, for example, service invention5 patents granted to the industrial sector represented 27.4 per cent of the nation’s total, while the approval rate of invention patent applications fi led by enterprises was only 13.2 per cent, far below the national average of 28 per cent. In comparison, the approval rate of invention patents fi led by universities was 43 per cent for the same year. It was therefore a wise decision for the industrial sector to seek outside assistance to enhance its innovative capabilities, and universities have naturally become major partners.

China’s industrial sector has witnessed an accelerated catch-up in its innovative capabilities during the past two decades, due to a

5. ‘Service invention’, also called ‘on-duty invention’, is an invention by a person who, by reason of his or her employment, is under the obligation to develop solutions in the fi eld of the invention. The right to a patent for a service invention belongs to the employer.




56


rapid increase in investment as well as an increase in cooperation with external research entities. Today, the largest share of domestic service inventions granted by the State Intellectual Property Offi ce of the People’s Republic of China (SIPO), founded in 1980, goes to the industrial sector (Figure 2.12), which was behind PRIs and universities and colleges in patenting activities prior to the mid-1990s.

Figure 2.12 Domestic service inventions granted by SIPO, as share of total industrial sector, 2001–2004 (%)

60%

50%

40%

30%

20%

10%

0%2001 2002 2003 2004

50.30%49.10%46.50%

41.70%

Industrial sector


Analysis of push and pull factors of the interactions between academia and the industrial sector

The pull factor: opportunities for universities due to the lack of industrial R&D capability

One of the major problems with China’s innovation system is its weak industrial R&D capacity. In general, the principal players in the innovation process are business enterprises that translate R&D results into profi table products or processes. Without strong and effective industrial R&D capability, efforts by universities, research institutes, or other organizations are often futile. The current status of industrial R&D capability in China is illustrated by the results of a 1996 innovation survey of large and medium-sized industrial fi rms in six provinces and cities conducted by the Ministry of Science and Technology.

The provinces and cities covered include Beijing, Shanghai, Guangdong, Jiangsu, Liaoning, and Haerbin. They are either China’s



57


economic powerhouses (such as Beijing, Shanghai, Guangdong, Jiangsu) or its traditional industrial bases (such as Liaoning and Haerbin). The average size of the fi rms reviewed ranges from 21,622 employees (for ‘Special Large Class’ in the Chinese classifi cation system) to 796 (for ‘Medium 2 Class’). Small fi rms are not included in the survey. Even for this somewhat selective group, the situation is not encouraging. Results show that while 73 per cent of the fi rms surveyed had engaged in some form of innovative activities in which R&D accounted for a small part, they spent only 3.7 per cent of their total sales revenue on these activities, of which more than half (54.7 per cent) was spent on purchasing equipment. Only 0.5 per cent of total sales revenue was spent on R&D (Ministry of Science and Technology, 1999).

One reason for this situation is that many large and medium-sized state-owned enterprises are undergoing governance and managerial reforms. Such reform has become the top priority of China’s economic reform. However, such a challenging task cannot be expected to be completed overnight. Under such circumstances, many state-owned enterprises simply do not have the fi nancial resources needed for R&D investment. Without some fundamental changes in their external fi nancial environment and internal management, there is little hope that they can be active in R&D. While in recent years non-state-owned industrial enterprises are playing increasingly more important roles in China’s economy, most are still relatively small compared with large and medium-sized state-owned enterprises. Their R&D activities are limited at present. However, in the long run, the non-state sector will become one of the most important forces in R&D commercialization.

The lack of in-house R&D capability of most Chinese industrial enterprises means that they cannot rely on themselves to solve more complex technical problems affecting production. They are also incapable of acquiring external knowledge in tacit and more dynamic forms, given that some form of in-house R&D capability is a prerequisite for being able to absorb knowledge from outside (Cohen and Levinthal, 1989; 1990). Thus, these enterprises require technical services from research institutes and universities. Because most of these fi rms do not have signifi cant in-house R&D capabilities, they have started to outsource technology contracts to universities. This has become a major form of collaboration between the two.


58


Such weak industrial R&D capabilities also mean that much potentially useful research work in universities, particularly that conducted in engineering schools and departments, would have a hard time being commercialized by fi rms outside universities. At the same time, rapid technological change in many high-tech and traditional industries has also created many technical and economic opportunities for these research studies. Some entrepreneurial faculty members are aware of these opportunities and have begun to launch their own initiatives, entering technology contracts with industrial fi rms. Universities have provided support to their faculty by establishing specifi c funds for enhancing work conditions and salaries, helping working staff to cooperate with the industrial sector by means of technology contracts and joint research agreements, and enabling departments to start small technology development companies. Few faculty, however, are willing to give up their university jobs. Most want a safety net in case their venture fails. For a long period of time, many universities have indeed provided such a safety net. To understand why universities would be willing to do so, we need to examine the push factor of the equation.

The push factor: slow reform in the higher education system and government policy orientation

Since the mid-1980s, a number of related factors have helped to push universities to establish closer linkages with the market. These factors include slow reform in the higher education system and in government policy orientation.

The major diffi culties in China’s higher education system lie in its heritage of a planned economy where central government played the key role in determining everything from faculty salaries to the number of students to be admitted to the specialty of a particular university. Chinese universities are far less autonomous than state-owned enterprises in industry. At the same time, the environment in which universities operate has changed dramatically, having become very market oriented. The mismatch between the centralized system and its market-oriented environment has created many tensions and pressures that have prevented China’s higher education system from adapting itself to the new challenges brought about by this opening to the market.


59


One constant challenge for universities is funding. Table 2.1 shows the income structure of a nationally recognized university in selected years in the 1990s. As can be seen, government appropriation, often closely tied to undergraduate admissions, represented only about one-third of the total budget and declined slowly throughout the 1990s. The largest sources of income were research, including government research projects, industrial collaborations, and so on. The contribution of university-owned enterprises to universities comes in two forms. One is through contracted research. The other is payback to universities of the profi ts gained from the enterprises’ operation (Section 2.4). The former is included in the ‘Research’ category, while the latter is included in the ‘Other’ category. Unfortunately, detailed data on the payback of university-owned enterprises to universities are diffi cult to access.

Table 2.1 An example of the income structure of a well-known Chinese university

1990 1992 1994 1996 1998Total income (in millions of yuan) 152.1 222.6 342.3 532.7 741.9Government appropriation (%) 36 30 32 32 29Tuition and fees (%) 2 4 8 10 11Research (%) 48 53 49 45 41Donations (%) 0.2 0.0 0.0 2.5 4.2Others (%) 13 12 12 11 15

Source: Data collected by author.

Universities’ heavy reliance on research funding was mainly due to slow reform in the higher education system. Reform proposals to grant universities more autonomy and take a more market-oriented approach to fi nancing China’s higher education system were debated. Reforms were not implemented until 1999 (Xue, 1999), with the introduction of a policy on enrolment expansion in higher education. Dramatic changes have taken place in universities ever since: from 1998 to 2001, university enrolment jumped from 6.43 to 12.14 million students, and average annual tuition for each student increased from 2,500 yuan to 5,000 yuan. While tuition and fees increased rapidly, they started from a low base and government regulations prevented them from increasing substantially. Universities in China were therefore placed in a diffi cult position: they were not provided with enough funding to operate, nor did


60


they have enough autonomy to take a more market-oriented approach to fi nancing their operation. Providing science and technology services to industry was therefore a very attractive and legitimate way for many universities to fi nance their operations.

A further analysis of sources of research funding for universities in China from the mid-1980s to late 1990s shows an interesting pattern. In 1985, when the science and technology reform and educational reforms were introduced, funding from government to universities for related activities accounted for about 75 per cent of the total. The rest came mainly from industry. Since then, the government’s proportion has declined steadily, while industry’s proportion has risen steadily. By the mid-1990s, industry surpassed government slightly, becoming the largest source of funding for university science and technology activities. While there have since been fl uctuations, industrial sources continue to provide close to half of this funding. To a certain degree, universities, particularly those specialized in engineering, have begun to depend on industrial research income to support their daily operations.

Government policy orientation also played an important role in the increased collaboration between universities and industry (Shao, 2002; Chen, 2004). Since the central government issued policy documents on science and technology system reform and education system reform in 1985, the government’s policy orientation has been focused consistently on pushing universities to put their research services on the market in order to help Chinese society’s economic and social development. High-tech industrial development has become one of the top priorities for university administrations. Both central and local governments at various levels have seen universities as engines of economic development and have tried to provide various incentives and supportive policies to encourage universities to forge closer ties with local industry.

To summarize, government appropriation for Chinese universities has long been far from adequate. Research funding from industry has become a major source of income for universities. Given that research funding from industry accounts for almost half of their total research income, universities naturally encourage their faculty members to develop closer ties with industry, or even to become entrepreneurs themselves. The endorsement of the central government and the fact


61


that university-owned enterprises have become a priority of university administrations must also be taken into account. These factors may help explain why university-owned enterprises have become so popular in China, but not in other developing countries with similar push and pull situations.

Problems and suggestions

Relatively low investment in basic research

Basic research has accounted for no more than 6 per cent of total R&D expenditure in China (Figure 2.13). This is far behind spending on basic research in developed countries and even less than that of the Republic of Korea, a newly rising industrial country which spent 14.5 per cent of its R&D expenditure on basic research in 2003 (Figure 2.14).

Figure 2.13 R&D expenditure in China by character of work, 2000–2004 (%)

2004

2003

2002

2001

2000

0% 10%

6 20.4 73.6

5.7 20.2 74.1

5.7 19.2 75.1

5 16.9 78.1.

5.2 17 77.8

20% 30% 40% 50% 60% 70% 80% 90% 100%

Basic research Applied research Experimental development

Source: www.stats.gov.cn

Basic research is the foundation for the development of science and technology and many developed countries have put signifi cant emphasis on the fi eld. With the development of the knowledge economy, basic research has also gradually revealed its importance for economic growth and for enhancing the technological base. The fact that China currently spends less on basic research will have a direct negative infl uence on those research entities that play a major role in the fi eld. Meanwhile, it will also impact negatively on China’s long-term development strategy.



62


Figure 2.14 R&D expenditure in selected countries by character of work (%)

China 2004

USA 2003

Japan 2002

France 2002

Russia 2003

Republic of Korea 2003

14.5% 20.8% 34.7%

15.1% 15.6% 69.4%

23.4% 35.7% 40.9%

13.4% 22.2% 64.4%

19.1% 28.9% 57.1%

6% 20.4% 73.6%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Basic research Applied research Experimental development


Universities’ potential needs to be further exploited

Judging from the angle of performing sectors (Figure 2.15), universities and colleges in China have always taken up a comparatively small share of the nation’s total R&D expenditure. Research institutes have been assigned far more importance than universities and colleges in China’s national innovation system.

Russia has encountered the same problem as China, both countries having developed their national innovation systems on the basis of that of the former Soviet Union (Figure 2.16). Universities and colleges in these countries have not played as important a role in their national innovation system as in OECD countries. As Figure 2.16 shows, OECD countries have spent far more of their R&D expenditure on universities and colleges than on research institutes. The situation is virtually the opposite in China, where R&D expenditure for universities and colleges represent only half of R&D expenditure for the research institutes. Meanwhile, although they are one of the pillars of basic research in China, the division of labour between them and research institutes is ambiguous. Universities and colleges often compete with research



63


institutes in basic research within the national innovation system rather than complementing them. Although universities and colleges’ input is relatively lower, they have already shown their greater potential and capacities in knowledge production, as noted above. Their potential in knowledge production and applications should clearly be further exploited.

Figure 2.15 R&D expenditure by performing sectors, 2000–2004 (%)

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%2000 2001 2002 2003 2004

Research institutes Enterprises U&C Others

2.68%

8.56%

28.80%

69.96%

2.04%

11.52%

27.15%

59.29%

1.40%

10.14%

27.28%

61.18%

1.17%

10.54%

25.92%

62.37%

1.00%

10.22%

21.95%

66.83%

Source: Compiled by author, using data from www.stats.gov.cnU&C = universities and colleges.



64


Figure 2.16 R&D expenditure in selected countries by performing sector (%)

80%

70%

60%

50%

40%

30%

20%

10%

0%

Research institutes Enterprises U&C Others

China2004

China2003

Japan2003

Germany2003

France2003

UK2003

Russia2003

Republic ofKorea2003

Canada2004

66.8%

22%

10.2%

16.8%13.7%

16.8% 17.1% 21.4%

33.1%

6.1%10.1%

1% 2.1% 0% 1.4% 3.2% 0.3% 0.2% 1.2%5.3%

9.1%9,3%

13.4%17.1%

9.6 10.5%

25.3%

12.6%

66.9% 69.8%62.3%

65.7% 68.4%

51.2%

75%76.1%


2.4 Academia and industry linkages: a general analysis

General introduction

It should be recognized from the outset that the most important form of university–market link is the fl ow of university graduates to the market, as well as the fl ow of new knowledge generated by university-based research through public channels. China is no exception.

In the past, before the establishment of the People’s Republic of China (PRC), Chinese universities already had direct interactions with the market. After the PRC was founded in the 1950s, the central government successively asked universities to organize short-term skills training programmes (1950), had them set up university-owned enterprises for student internships and R&D activities (1957), and requested that they combine the educational process with production and research activities (1959). All these linkages refl ect the basic functions of universities for enterprises: education and research. This traditional connection of higher education to the industrial world is a specifi c feature of socialist countries.



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However, linkages have varied greatly over the past two decades. Since the 1985 science and technology system reform, university faculty members, particularly those in the fi eld of engineering and other applied disciplines, have worked aggressively to develop closer ties with industry. At the Third National Higher Education Working Conference in 1988, the government formally encouraged universities to conceive of different ways to serve society. Over the years, universities have developed various linkages to the market, including informal consulting by university researchers to industry, technology contracts, technology transfer and licensing, joint research centres, university-run enterprises, and university-based science parks. These forms of linkage will be analysed in detail below.

Forms of academia–industry linkage

Of all the forms of academia–industry linkage, technology contracts and university-run enterprises are probably the most common and fl exible. While university licensing activities have been on the rise, they are limited to the universities with strong engineering disciplines that are the most active in patenting. As a new form, joint research centres are making a strong appearance as mechanisms for cooperation between universities and international companies, as well as in carrying out joint research online. This has gained considerable support from the Chinese Government, which launched the Law on Promoting the Transformation of Scientifi c and Technological Achievements in 1996. This law encourages different means of joint research. University-based science parks have become popular in recent years, but have been built mostly in major cities with dynamic entrepreneurial activities.

Technology contracts

Of all the forms of linkage, technology contracts have become the most important source of research funding for universities. An examination of R&D spending in Chinese universities (Table 2.2) reveals that a very high percentage (close to 80 per cent) is earmarked for applied research and development. It is expected that most of this spending will be funded by industry through different forms of technology contract.


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Table 2.2 R&D spending by Chinese universities (1991–2004, 100 million yuan, %)

Basic research Applied research Development Total19911992199319941995199619971998199920002001200220032004

1.9 (13.9)2.4 (12.5)3.4 (12.2)5.1 (13.2)6.5 (15.4)7.5 (15.7)9.7 (16.8)9.5 (16.6)

11.4 (18.0) 17.8 (23.2) 17.0 (16.6) 27.8 (21.3)32.9 (20.3)47.9 (23.8)

7.6 (55.5)10.1 (52.6)14.9 (53.6) 21.4 (55.3)23.3 (55.1)26.7 (55.9)31.6 (54.8)31.4 (54.8)37.7 (59.4)40.0 (52.2)59.0 (57.6)67.1 (51.4)89.7 (55.3)

108.8 (54.2)

4.3 (31.4)6.6 (34.4)9.5 (34.2)

12.1 (31.3)12.5 (29.6)13.7 (28.7)16.4 (28.4)16.3 (28.4)14.4 (22.7)18.9 (24.6)26.4 (25.8)35.6 (27.3)39.7 (24.4)44.2 (22.0)

13.7 (100)19.2 (100)27.8 (100)38.7 (100)42.3 (100)47.8 (100)57.7 (100)57.3 (100)63.5 (100)76.7 (100)

102.4 (100) 130.5 (100)162.3 (100)200.9 (100)

Source: Based on data from China Statistical Bureau and State Science and Technology Commission, 1992–2004.

Technology contracts in China are usually composed of categories such as technology development, technology transfer (non-patent technology transfer and patent licensing), technical services and technical consultancy (Table 2.3; MOST, 2001–2004).6

As shown in Table 2.3, technology contracts signed in China have witnessed stable yearly growth during the past four years. Among the contracts, the category of technology development always ranks fi rst.7

6. According to the Contract Law of PRC: (1) a technology development contract refers to a contract concluded between parties for the purpose of conducting research in and development of new technologies, new products, new processes, and new materials as well as their systems; (2) technology transfer contracts include contracts on patent transfer, contracts on transfer of the right to apply for a patent, contracts on transfer of know-how, and contracts on the licensing of patent exploitation; (3) technical consultancy contracts include contracts whereby feasibility studies, technological forecasts, technical investigations, and analytical evaluation reports shall be provided in respect of specifi c projects; (4) technical service contracts refer to contracts whereby one party undertakes to solve specifi c technical problems by using its technical expertise for the other party, excluding contracts for construction projects and contracts for work.

7. Currently, there is no offi cial ranking of universities in China. There are several unoffi cial rankings based on different criteria such as reputation, publications, and student admissions. The ranking of top universities does not differ signifi cantly. Netbig ranking was founded in 1999. It is quite popular and easily accessible. For more information see www.netbig.com


http://www.netbig.com

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Technology development normally presents itself in the form of ‘joint research’ in which enterprises entrust universities with technological tasks, or team up with universities to jointly conduct research on a specifi c topic, or even set up an entity within a university for long-term research in a specifi c fi eld.

Table 2.3 Technology contracts in China (2001–2004, billion yuan)

2001 2002 2003 2004Total amount 78.28 (100) 88.42 (100) 108.47 (100) 133.44 (100)Contract Category

Technology development 30.96 (39.6) 36.29 (41.0) 42.61 (39.3) 50.90 (38.1)Technology transfer 20.38 (26.0) 20.24 (22.9) 24.95 (23.0) 29.47 (22.1)Technical consultancy 4.31 (5.5) 5.41 (6.1) 7.59 (7.0) 8.38 (6.3)Technical service 22.61 (28.9) 26.46 (29.9) 33.63 (31.0) 44.69 (33.5)

Service provider

Industrial enterprise 28.57 (36.5) 35.86 (40.6) 51.87 (47.8) 75.41 (56.5)University 8.64 (11.0) 7.26 (8.2) 10.85 (10.0) 11.66 (8.7)Research institute 18.16 (23.2) 18.71 (21.2) 19.52 (18.0) 19.04 (14.3)Technology trade agencies 10.83 (13.8) 13.88 (15.7) 15.19 (14.0) 15.00 (11.2)

Individuals or Partnerships 1.3 (1.7) 7.46 (8.4) 1.08 (1.0) 0.81 (0.6)Others 10.78 (13.8) 5.25 (5.9) 9.96 (9.1) 11.51 (8.6)

Source: Based on data from the Ministry of Science and Technology, www.most.gov.cn.

Among the different service providers, it is clear that industrial enterprises are playing the most dynamic and important roles in the technology contract business, with their trade sum exceeding 56 per cent of the total in 2004. However, research institutions’ activity in the fi eld of contract business has declined from 23 per cent in 2001 to 14 per cent in 2004. This is partly due to the change of status of many research institutes that were restructured and turned into stand-alone enterprises. The services they provided would now be counted in the category of ‘industrial enterprises’ rather than ‘research institutes’. Universities’ share has remained stable.

Technology development is playing a dominant role in Chinese universities’ efforts in pursuing technology transfer. Since the 1990s, industrial funding has claimed over half of R&D investment by universities, a majority of which was made in the form of technology development. Tsinghua University is a good example: Table 2.4


http://www.most.gov.cn

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demonstrates that almost every year, over 70 per cent of its technology contracts were signed in the form of technology development.

Compared with the above-mentioned linkage forms, technical consultancy and service is perhaps the most fl exible way to transfer knowledge and technology. It mainly involves providing technological information and technical training. This is very similar to what technology contracts provide, but less formal and often based on personal trust between the two parties.

Table 2.4 Technology contracts of Tsinghua University

1991 1992 1993 1994 1995 1996 1997 1998 1999Technology development (%) 72.43 69.03 86.55 94.09 83.56 75.06 76.20 79.16 79.11

Technology transfer (non-patent) (%) 9.54 24.64 7.22 1.58 5.74 5.61 13.33 6.02 7.26

Patent licensing (%) 0.00 0.00 0.00 0.00 4.51 0.00 0.00 4.43 0.09Technical service (%) 16.79 5.83 5.19 4.10 5.19 17.97 9.14 8.05 11.21

Technical consultancy (%) 1.24 0.49 1.05 0.24 1.01 1.36 1.33 2.34 2.32

Total (million yuan) 1,497 5,168 6,621 12,789 8,866 12,304 13,100 17,520 25,287

Source: Based on data from the Contract Offi ce of the Department of Science and Technology Development, Tsinghua University.

Technology transfer and licensing

When a university-developed technology enters into the process of commercialization, technology transfer can happen in two ways: patent licensing; and non-patent technology transfer.

When compared with the USA, where patent licensing and sales are one of the most important methods for universities to transfer technology, patenting activity in China’s universities has been relatively low. According a 1998 survey, the total revenue generated by US universities through patent licensing was US$576 billion, greatly outnumbering the total revenue (RMB 0.19 billion) generated by Chinese universities in 2001, which was the highest in the past two decades (Table 2.5).


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Table 2.5 Income generated by Chinese universities through patent licensing and sales (1985–2002)

Year Number of patents

Income produced (1,000 yuan) Year Number

of patentsIncome produced

(1,000 yuan)

1985 89 6,135 1994 326 25,345

1986 215 9,024 1995 364 36,641

1987 189 7,033 1996 367 39,584

1988 259 9,117 1997 362 36,532

1989 194 5,196 1998 371 55,369

1990 336 14,410 1999 298 70,096

1991 331 18,470 2000 299 125,396

1992 486 39,045 2001 410 185,967

1993 390 49,831 2002 532* 150,097*

Source: www.cutech.edu.cn* Number of contracts reached and the income generated.

The weakness of China’s universities in patent licensing and sales can be attributed to weaknesses in the country’s innovation system, such as inadequacy in patent awareness, the shortage of patents with commercial value, lack of original innovation strength, and weakness in government support structures to help researchers commercialize their inventions (Shao, 2002). For example, 1,653 patents were granted to domestic applicants in China in 2001, compared with 125,704 in Japan, and 35,900 in the Republic of Korea (IMD, 2001).

Although the absolute number is not very high, patent licensing and sales by universities in China greatly infl uence the patenting activities of the national innovation system. While enterprises are the most active participants in patenting activity, Chinese universities are nevertheless important players. This is especially true for the application of invention patents. Table 2.6 shows that service invention patents granted to universities have exceeded a quarter of the nation’s total.


http://www.cutech.edu.cn

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Table 2.6 Service invention patents granted to Chinese universities (1996–2003, piece, %)

Service invention patent to university

Service inventionpatent

Invention patent

1996 228 (27.6) 825 (59.7) 1,3831997 256 (28.1) 912(59.5) 1,5321998 243 (25.5) 954 (57.6) 1,6551999 425 (25.2) 1,685 (54.4) 3,0972000 652 (23.1) 2,824 (45.7) 6,1772001 579 (22.1) 2,614 (48.5) 5,3952002 697 (22.2) 3,144 (53.6) 5,8682003 1,730 (25.1) 6,895 (60.5) 11,400

Source: www.sts.org.cnNote: Although invention patents are granted to both Chinese nationals and foreigners, this table presents only those granted to Chinese applicants. Figures in () indicate the ratio of the number in the same column to the number of the next column.

Tables 2.5 and 2.6 show that since the early 1990s income generated through patents by universities has increased substantially as compared with the 1980s, while the number of patents involved has only increased modestly. This can be partly attributed to the fact that many universities have begun to pay more attention to intellectual property and learnt to better exploit the commercial benefi ts of their patents. Many universities have set up technology transfer offi ces or offi ces of intellectual property rights (IPR) to promote the intellectual property they generate.

Non-patented technology is another important product that university technology transfer offi ces or IPR offi ces can commercialize. Rather than charging a percentage of sales for technology transfer as is common practice internationally, Chinese universities charge one fee in a lump-sum fashion. This is due to inadequate protection of technologies and patents, as well as to a lack of trust between universities and their business partners.8 Sometimes universities start their own companies so

8. Distrust towards enterprises has become a principle for universities when transferring technologies. During an interview, an employee of a certain university in charge of technology transfer stated: ‘We try to charge the total fees in only one time in order to avoid future troubles’. On the other hand, enterprises also complain that: ‘Some of their technologies can’t even be put into practice, however, they always keep on asking for the money.’ There are quite a few quarrels between universities and enterprises brought by technology transfer issues, some of which even result in court appeals.



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that their technologies can be commercialized within their own circle (Chen, 2004).

Joint research centres

Joint research is a new way for enterprises to develop technologies in cooperation with other enterprises, universities, or research institutions. It can help enterprises make full use of internal and external resources, lower the cost of and reduce potential risks in technology development. Among the available partners, universities have become the preferred choices of enterprises due to the high quality of talent and solid research that they can offer.

Table 2.7 Science and technology research centres by type of universities in China (1999–2002)

1999 2000 2001 2002Total 1,456 4,432 4,599 4,842Comprehensive universities 243 1,122 1,073 1,099Engineering universities 541 1,972 1,958 2,117Agriculture universities 193 420 452 481Medical universities 381 635 604 579Normal universities 94 390 434 476Others 4 73 78 90

Source: Science and Technology Development Centre, Ministry of Education.

In 1999, the Ministry of Education formally launched a national programme named Invigorating Education Towards the 21st Century. A project ‘to stimulate the development of high-tech industry in universities’ was a key element of this programme. The project encouraged universities to interact with enterprises and research institutes by various means, particularly by jointly setting up engineering research centres and productivity promotion centres in universities. Ever since, the number of science and technology research centres in China’s universities has grown rapidly (Ministry of Education, 1999). As shown in Table 2.7, in the year 2000 the number of science and technology research centres in China’s universities grew by over 200 per cent from the year before, and it then maintained a stable growth in the following years. The importance of research centres in universities has attracted much attention from government and enterprises. According to statistics


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from the Ministry of Science and Technology, over 1,000 research centres for technology development in universities have developed very close relationships with both public and private enterprises.

A new trend for joint research in China’s universities is the establishment of research centres with multinational companies. The case of Tsinghua University is a good example of this. In 1992, the university set up its fi rst joint research centre with the Japanese company Panasonic. Over the next decade, joint research centres in Tsinghua University grew quickly, in terms of both numbers and scale. By the end of 2002, multinational companies from nine countries and regions had jointly set up 48 research centres with Tsinghua University, 18 of which were with Fortune 500 companies (Tables 2.8 and 2.9).

Table 2.8 International joint research centres in Tsinghua University

Year New centres WithFortune 500

Total sum(10,000 yuan)

With Fortune 500

1992 1 0 80.00 01993 1 0 100.00 01994 5 2 3,531.19 250.221995 3 2 3,018.00 540.001996 4 3 1,192.50 1,102.501997 4 1 647.70 320.001998 5 1 1,653.28 397.801999 5 1 1,777.88 600.002000 7 4 1,933.61 1,025.812001 9 3 5,268.92 812.342002 4 1 147,250.00 1,652.00Total 48 18 166,453.08 6,700.67

Source: Science and Technology Department of Tsinghua University.

In a decade, over 1.6 billion yuan have been invested in 12 research areas, such as information technology, machinery, automation, automobiles, and biology. Overall, Tsinghua University has a 29 per cent share in these centres. Multinational companies own 4 per cent, and the rest is jointly owned by both sides (Table 2.10).

Cooperation over the last ten years has also enabled these centres to produce 36 domestic patents, 23 international patents, over 500 published papers, and 12 products. Of the 145 projects undertaken


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by these centres, 77 were jointly developed by both sides. Altogether, over 5,000 students have benefi ted from such joint research.

Table 2.9 Regional distribution of international partners

Country/region Number Total sum(10,000 yuan)

United States of America 23 142,584.80Japan 10 6,337.52Germany 5 734.80Canada 2 1,136.90Republic of Korea 2 3,057.82Taiwan 2 10,619.50Hong Kong (China) 2 173.40United Kingdom 1 1,652.00Switzerland 1 156.34Total 48 166,453.08


Table 2.10 Ownership of research centres (%)

Tsinghua University International companies Jointly ownedResearch centre 29 4 67Project 29 4 67


Meanwhile, cooperation has proven that joint research centres of high quality and standards can provide much benefi t to a university in terms of:

• accelerating commercialization of technology outcome, • attracting adequate funding for science and technology research,• providing opportunities for students to interact with industry and

put theory into practice, • granting university personnel advanced management experience.

Meanwhile, multinational companies have also found the intangible assets of well-known Chinese universities to be a good way of expanding the market share of their products in China (Zhou and Zhu, 2004; Fan, 2005).


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Another new trend for China’s universities joining in research with companies is the virtual research centre. In 1999, the Ministry of Education initiated its experiment on virtual research centres by setting up ten such centres among different universities, mainly focusing on the fi elds of mathematics, chemicals, computer and information science, and life sciences. In 2001, these research centres fi nished the experimental stage and entered into the formal operation stage. By 2002, the Ministry of Education had formally approved 20 virtual research centres, of which three centres were set up jointly by universities and enterprises, and the rest mainly established by universities and research institutions.

By making full use of modern calculation and communication tools, such as the Internet, these virtual centres can help reduce the time and human resources spent on travelling between different research sites, maximize the integration of relevant resources, and operate far more fl exibly than regular joint research centres. However, determining ownership of the intellectual property developed in the virtual centre has now become a challenging question (Liu, Xiao, and Hui, 2002).

Science parks

China’s fi rst university-based science park – Northeast University Science Park – was established in 1989. Since then, university-based science parks have become new avenues for commercializing university technologies. There are now over 40 university-based science parks at the national level throughout China, such as those in Tsinghua University, Peking University, Ha’erbin Polytechnic University, Shanghai Polytechnic University, Southeast University, Nanjing University, and Chengdu Electronic Science and Technology University. There is also a large group of university-based science parks launched by local governments or independently organized by universities themselves.

China’s university-based science parks were partly inspired by the legends of Stanford Science Park, Cambridge Science Park, and many others. These parks are typically created through the joint effort of local government and university administration. Most of them are located on or adjacent to the university campus and administered by a commercial entity established by the university, or through a joint venture between local government and the university.


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To establish and develop new and high-tech industrial development zones is a major component of China’s efforts to boost science and technology development. Since China formally launched the Torch Programme in 1988 (Section 2.5), high-tech development zones have developed quickly and expanded greatly. To date, a total of 53 new national high-tech development zones (NHTZs) have been playing an increasingly important role in national economic growth and social development. Located in knowledge-intensive and open environments and relying on China’s science and technology capability and economic strength, these NHTZs are to provide an optimized environment in which to transform R&D achievements into real productivity. From the very beginning, NHTZs have attached much importance to linkages between high-tech development and market demand at home and abroad. This is one of the most important initiatives in commercializing science and technology in China.

Different from NHTZs, science parks make full use of the advantages of the universities they are associated with in terms of innovative capability, talent, and solid research foundations. Instead of being places for mass production, university-based science parks have been launched mainly with high-tech entrepreneurship in mind. On the other hand, since most universities are also located in NHTZs, companies active in these science parks can also enjoy preferential terms offered in NHTZs (Mei, Xu, and Luo, 2005).

University-based science parks have played an important role in three areas in particular:

• in incubating spin-offs created by faculty or students from universities, which is their core function as well as the key difference between science parks and NHTZs;

• by widening and increasing the channels to integrate and commercialize all kinds of scientifi c outcome from the local market and elsewhere; in addition to providing incubators to spin-offs, these parks have also become a magnet for other high-tech start-ups, including those created by expatriates;

• by providing services to enterprises located in the science park, which means that they are obliged not only to manage the park’s real estate, but also to provide a sound environment for innovation,


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ranging from fundraising to legal counsel to talent absorption (He and Zhang, 2005).

Table 2.11 helps to show the function of university-based science parks as important incubators for university-owned spin-offs. In 2004, of the 4,563 enterprises affi liated with universities, over 24 per cent were located in science parks. Although relatively small in number, these enterprises have performed far better than those outside science parks in terms of income, profi t, and tax paid, with over 60 per cent, 64 per cent, and 49 per cent of the total fi gures generated by the university-owned enterprises.

Table 2.11 General statistics of university-owned enterprises in science parks (2004, billion yuan)

Enterprises in science parks Total university-owned enterprisesNumber 1,121.00 (24.57%) 4,563.00Income 58.26 (60.10%) 96.93Profi t 3.24 (64.95%) 4.99Tax paid 2.39 (49.26%) 4.87Income to universities 0.45 (25.56%) 1.75

Source: Science and Technology Development Centre, Ministry of Education. Note: Figures in () indicate the ratio to the total number of the year.

While these science parks have developed very rapidly over the last few years, the following problems need to be addressed: • Many parks were not very clear of their mission and strategy at fi rst

and accepted all kinds of enterprises without careful selection, due to their thirst for short-term economic achievements. Only when the parks identify their specifi c area for development according the strengths of the university will they obtain comparative advantages and long-term development.

• There are problems in park management and operations, especially when parks must simultaneously accept guidance from several administrative bodies including district, municipal, and provincial governments. This hinders the parks’ smooth development.

• A lack of managerial talent has curbed the parks’ rapid growth. Science parks are in urgent need of management professionals or those specialized in areas such as technology assessment,


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technology transfer, and capital operation. The availability of such professionals has become an important factor in determining the development of parks (He and Zhang, 2005).

As an important part of the national innovation system, a successful science park brings prestige to its host university. This not only boosts the regional economy and technological innovation, but also provides an important platform from which the university can serve society.

University-owned enterprises

While there is no formal defi nition, university-owned enterprises are those enterprises that are still in one way or another controlled by the universities they are affi liated with. Legitimacy of this control derives from the fact that many of these enterprises were created by funds from universities and that many universities remain the largest shareholders in these companies. In some other cases, enterprises willingly submit their management control to universities so that they can generate intangible benefi ts for themselves.

University-owned enterprises are not a novelty for Chinese universities. Many universities, particularly those that are engineering and science-based, have had university-owned factories since the 1950s. These were mainly used for students to obtain short-term internships or apprenticeships in a real production environment. Moreover, under the ‘work unit’ system (a self-suffi cient organizational system for enterprises, universities, and other social institutions established after the founding of the PRC), many Chinese universities owned their own service providers such as print shops, publishers, and guest-houses (for a detailed discussion of the system, see Lu, 1990). What is new is the new market environment, the new roles these enterprises are playing (or expected to play), and their effect on the complex relationships between university-owned enterprises and their parent universities.

The development of university-owned enterprises can be divided into three stages. The fi rst stage was from the early 1980s to 1990. During this period of time, China had just begun to implement its reform and open door policy. Faced with commercial opportunities and their internal fi nancial requirements, traditional university-owned service providers began to open up to wider society, while creating many new


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services. Most of their operations were focused on technology transfer, technology development, technical consultancy, and technical service (MOST, 1999).

During this stage, they were run following three models. The fi rst was that of university-owned factories or print shops. The second model was that of joint commercial entities between universities and outside enterprises. The third model took form in the technology development companies created by universities and university departments. By 1989, sales of university-owned enterprises had reached 470 million yuan (Li, 2000).

However, many university-owned enterprises in the early stage were short-term, profi t-oriented, and poorly managed. This generated some controversy as to whether it was appropriate for Chinese universities to run such enterprises. In order to address this issue, the then State Commission of Education, State Science and Technology, and Investigation Offi ce of the General Offi ce of the Party formed a joint investigation team in November 1990. The team visited over 30 universities in Beijing, Shanghai, Nanjing, and other cities to look into the issue. It then submitted a report that endorsed the development of university-owned enterprises.

The second stage of university-owned enterprises was from 1991 to 2000. In 1991, China’s State Council issued its endorsement of university-owned enterprises in a document submitted by the Commissions on Education and Science and Technology to provide guidelines for administering university-owned enterprises. Meanwhile, in 1993, another document submitted by the Commission of Education was again endorsed by the State Council to expedite the reform and development of higher education. This document prescribed that university-affi liated enterprises of a high-tech nature should be actively developed. Since then, particularly following Deng Xiaoping’s southern tour in 1992, university-owned enterprises have been growing at an accelerated speed. In 1992, sales of such enterprises jumped to 2.9 billion yuan from 1.76 billion yuan in 1991. By 1999, this number had reached 37.9 billion yuan.

The third stage of university-owned enterprise development started in the year 2000, when new controversies began to surface over the


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appropriateness of universities getting involved in running enterprises. There were also concerns about the potential fi nancial risks that universities were exposed to by trading these enterprises on the stock markets. Further, increasingly many university-owned enterprises felt the need to change their governance structures in order to allow them to operate like real commercial enterprises. Recently, the government has begun to encourage universities and their affi liated enterprises to ‘de-link’, by clarifying property rights and obligations, separating management from administration, shareholding reform to establish a modern enterprise system, and standardizing the operating quality and investment actions to achieve scientifi c management. Clearly, university-owned enterprises in China are now at a new crossroads.

In 2004, 4,563 enterprises were affi liated with regular Chinese universities. Table 2.12 presents an overall picture of their development. As can be seen, over the past several years and in particular between 1998 and 2000, university-owned enterprises have maintained their growth momentum in terms of sales, profi t and tax paid. Since 2001, however, the growth rate has slowed down to some extent, with the profi t and income to universities even decreasing in 2002 and 2003. This shows that their economic effi ciency is declining.

Table 2.12 Growth of university-owned enterprises (billion yuan)

Year Number Sales Profi t Tax paid Income to universities

19971998199920002001200220032004

-5,9285,4445,4515,0395,0474,8394,563

29.5531.56 (6.8)37.90 (20.1)48.46 (27.9)60.30 (24.4)72.01 (19.4)82.67 (14.8)96.93 (17.3)

2.722.59 (-5.6)3.05 (18.0)4.56 (49.5)4.81 (5.5)4.59 (-4.6)4.29 (-6.4)4.99 (16.3)

1.231.35 (9.7)1.66 (18.6)2.54 (53.3)2.84 (11.8)3.63 (27.8)3.87 (6.61)4.87 (25.8)

1.581.50 (-5.1)1.59 (6.0)1.69 (6.2)1.83 (8.3)1.72 (-6.0)1.80 (4.7)1.75 (-2.8)

Source: Science and Technology Development Centre, Ministry of Education. Figures in () indicate growth rate.

Of all the university-affi liated enterprises, science and technology enterprises were the focus of both the government and university administrations. In China, the term ‘science and technology enterprises’ refers to those enterprises that have a strong related background and capabilities, and offer products or services that are science and


80


technology knowledge-intensive. Each year, of the total number of university-owned enterprises, around 40 per cent are classifi ed as science and technology enterprises (Table 2.13). While the number is less than half of the total, these enterprises have accounted for a major part of the total number of university-owned enterprises in terms of sales, profi t, and tax paid almost every year. Furthermore, in both 2003 and 2004, over 80 per cent of sales were generated by these science and technology enterprises. While the growth rates of sales, profi ts, and tax paid for science and technology enterprises have remained higher than for other university-owned enterprises, they have apparently slowed down in recent years. The growth rates of profi ts and income to universities generated by university-owned science and technology enterprises have decreased since 2001.

Table 2.13 Growth of university-owned science and technology enterprises (billion yuan)

Year Number Sales Profi t Tax paid Income to universities

19971998199920002001200220032004

-2,355 (39.7)2,137 (39.3)2,097 (38.5)1,993 (39.5)2,216 (43.9)2,447 (50.6)2,355 (51.6)

18.49 (62.6)21.50 (68.1)26.73 (70.5)36.81 (75.9)44.78 (74.3)53.91 (74.9)66.81 (80.8)80.68 (83.2)

1.82 (66.9)1.77 (68.3)2.16 (70.8)3.54 (77.6)3.15 (65.5)2.54 (55.3)2.76 (64.3)4.09 (81.9)

0.69 (45.6)0.83 (61.5)1.10 (66.3)1.88 (74.0)2.01 (70.8)2.59 (71.3)2.94 (75.9)3.85 (79.1)

0.68 (43.0)0.66 (44.0)1.39 (87.4)0.85 (50.3)0.78 (42.6)0.76 (44.2)0.77 (43.0)0.83 (47.4)

Source: Science and Technology Development Centre, Ministry of Education. Note: Figures in () indicate the ratio to the total number of the year.

While there are many university-owned enterprises in China, only a very small proportion of them are successful. Such successful and infl uential enterprises are concentrated in a small number of selected universities and cities around the country. Take income in 2004, for instance: the top 13 universities that had achieved higher income accounted for over 84 per cent of the total amount of the year, leaving the rest of the universities with less than 16 per cent of total income.

Table 2.14 presents some overall features of the top 20 universities with the highest university-owned enterprise sales. Taken together, sales of these enterprises accounted for 75 per cent of total sales realized by


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Chinese university-owned enterprises. A careful examination of this group will fi nd that universities can be classifi ed into three categories. The fi rst category includes those with a strong engineering background, the second includes well-known comprehensive universities, and the third includes universities with a unique market niche (such as Chinese medicine or foreign languages).

Table 2.14 Top 20 universities with highest total sales from affi liated enterprises (2004)

Saleranking

Name Sales(billion yuan)

Old classifi cation

University ranking

Location

1 Peking University 22.609 Comprehensive 1 Beijing

2 Tsinghua University 17.841 Engineering 1 Beijing

3 Zhejiang University 4.976 Engineering 5 Hangzhou

4 Northeast University 3.585 Engineering 34 Shenyang

5 Tongji University 2.945 Engineering 21 Shanghai

6Petroleum University (East China)

2.273 Engineering 51 Beijing

7Ha’erbin Polytechnic University

2.059 Engineering 13 Ha’erbin

8 Fudan University 1.924 Comprehensive 4 Shanghai

9 Wuhan University 1.892 Comprehensive 13 Wuhan

10 Xi’an Jiaotong University 1.811 Engineering 11 Xi’an

11 Shanghai Jiaotong University 1.181 Engineering 7 Shanghai

12 Sun Yat-Sen University 1.105 Comprehensive 11 Guangzhou

13Huazhong University of Science and Technology

1.085 Engineering 14 Wuhan

14 Nanjing University 1.063 Comprehensive 3 Nanjing

15Jiangxi University of Chinese Medicine

0.852 Medicine 225 Nanchang

16 Southeast University 0.815 Comprehensive 21 Nanjing

17Taiyuan University of Technology

0.659 Engineering 121 Taiyuan

18Beijing Foreign Language Institute

0.657 Language 60 Beijing

19Nanjing University of Posts and Telecommunications

0.642 Engineering 195 Nanjing

20 Shandong University 0.632 Comprehensive 24 Jinan

Source: Based on data provided by the Science and Technology Department Centre, Ministry of Education.


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Last but not least, all these universities are located in China’s largest cities, such as Beijing and shanghai, and in major provincial capitals, such as Xian, Nanjing, and Wuhan.

Table 2.15 presents the provinces and cities with university-owned enterprises generating profi ts exceeding 100 million yuan. Taken together, profi ts of enterprises reached 4,545 billion yuan, accounting for 91 per cent of the entire fi gure for China.

Table 2.15 Provinces and cities with profi ts exceeding 100 million yuan from university-affi liated enterprises (2004, million yuan)

Rank Province/City Profi ts Rank Province/City Profi ts1 Beijing 1,964 6 Zhejiang 2252 Shanghai 705 7 Shanxi 1513 Liaoning 585 8 Sichuan 1394 Jiangsu 313 9 Shanxi 1225 Hubei 229 10 Guangdong 112Total profi ts 4,545

Source: Science and Technology Department Centre, Ministry of Education.

A unique feature of Chinese university-owned enterprises is that some of them have been publicly traded on the stock market. The fi rst example of this can be traced back to 1993, when Fuhua Shiye, owned by Fudan University in Shanghai, went public on the Shanghai Stock Exchange. Like other kinds of university-affi liated enterprises, these listed companies have played an important role in commercializing technological achievements as well as in solving the problem of capital shortage for university operations. However, as the number of such enterprises has increased and their scale expanded, university-affi liated enterprises have also revealed their inherent problems, such as unclear property rights, the risks universities are exposed to by these business operations, the lack of a mechanism for universities to exit from these situations, and interference by university administration with enterprise management. These challenges are part of the reason that university-owned enterprise business achievements in recent years have declined almost yearly. To guarantee the healthy development of university-owned enterprise business operations as well as university teaching and science and technology research activities, many have


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suggested that the enterprises cut their links with universities and be given full autonomy in their operations. In 2001, the State Council formally endorsed a document submitted by the Ministry of Education to clarify the property rights and standardize the management mechanism of university-affi liated enterprises. Tsinghua University and Peking University were designated as trial cases (State Council, 2001).

By 2005, 40 university-owned enterprises were listed on the stock market. About two-thirds of these companies went public via their own initial public offerings (IPO), while the rest went public by purchasing the ‘shells’ of existing public companies. The ‘university block’ has become a signifi cant player in China’s stock markets, and this has become a source of controversy. The following analysis is based on data provided by the 30 publicly traded companies between 2000 and 2002.

Table 2.16 Industry distribution of university-owned listed enterprises (2000–2002)

Industry NumberComprehensive 8Computer applications and services 7Chemical materials and products 3Equipment manufacture 3Medicine manufacture 3Telecommunication and relevant equipment manufacture 1Computer and relevant equipment manufacture 1Biomedical products 1Light industry (offi ce equipment and supplies) 1Other manufacture 1Retail 1Total 30

Of the 30 companies listed (Table 2.16), half were in the business categories of ‘comprehensive’ and ‘computer applications and services’. Of the remaining companies, most were in other techno-business categories such as chemicals, equipment manufacture, and medicine. Of these listed companies, universities are the largest shareholders.

Of all the forms of university–market linkage, informal consulting, technology contracts, licensing, and university science parks have


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now become common worldwide. The university-affi liated enterprises described above are, to a certain degree, unique to China. They are also the most controversial of all forms of university–market collaboration. Whether one likes it or not, university-affi liated enterprises, along with those high-tech enterprises affi liated with government research institutes, have grown into a major force in China’s high-tech industry. Such enterprises have made a unique contribution to the development of high-tech industry in China.

2.5 Evaluation of government policies and programmes

Since China initiated science and technology system reform in the mid-1980s, its national innovation system has changed fundamentally. The country’s innovative capability has made tremendous progress over the years. This is manifested not only in increased science and technology publications, but also in traditional industries’ productivity gains and the growth of new high-tech industries. Government policies and legislative actions have played an important role in these achievements. The following discussion will provide a general review of these policies and legislative activities.

An overview of policy development

The 1985 resolution on structural reform of the science and technology system

The 1985 resolution on the structural reform of China’s science and technology system set clear goals, outlined guiding principles, and provided directions for the reform to proceed. It has become the cornerstone of China’s reform of its innovation system over the past two decades. While the document touched on all three major players in China’s innovation system, most specifi c reform measures were targeted at public research institutes (PRIs) (Xue, 1997).

According to the resolution, the fundamental objectives of the reform were to ‘apply results from science and technology research to production widely and rapidly; to make full use of science and technology personnel; to greatly empower science and technology as the driving force for the economy; and to promote economic and social development’. The guiding principle for the reform was that ‘economic


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development must rely on science and technology, while science and technology research must render services to economic construction’ (CCCPC, 1985b). The resolution pointed out three areas in which structural reform was most needed: the operating mechanism, the institutional structure, and the management of science and technology personnel.

In the area of the operating mechanism, the resolution took a ‘push and pull’ approach in an effort to expedite the fl ow of R&D results from laboratories to industry. On the push side, it called for change in the appropriations system for funding science and technology research in PRIs. Funding channels would be diversifi ed based on type of research project as well as type of PRI. The government would gradually reduce the amount of funding for PRIs’ operating costs, thus ‘pushing’ them to acquire funding from other sources. In addition, PRIs would no longer automatically be ‘entitled’ to major research grants from their supervisory government bodies, often as part of national or local science and technology development plans. Instead, they would have to compete with other qualifi ed research institutions for such projects through a public bidding system.

On the pull side, the resolution called for further development of the burgeoning technology markets, so that R&D results could be offered as commercial products. These technology markets would provide not only fi nancial incentives for PRIs to engage in technology transfer, but also valuable information about what technologies were needed and where. At the same time, the government would continue to provide some funding to cover basic operating costs for PRIs engaged in basic research, and establish a national natural science foundation to support these PRIs’ research through a peer-reviewed grant system. Venture capital funds would also be set up to support the development of high technologies.

In the area of institutional structure, the resolutions called for greater coordination and integration between research institutions and industrial enterprises, between civilian and military research, and between research in different industrial sectors and regions. It encouraged various horizontal linkages among PRIs, universities, and industrial enterprises, including mergers between PRIs and industrial


86


enterprises. More importantly, the resolution not only provided an offi cial sanction but also encouraged the formation of independently run research enterprises of varied ownership, many of which were spin-offs from PRIs.

Finally, in the area of science and technology personnel management, the resolution condemned the egalitarian ‘iron rice bowl’ system, in which science and technology personnel were practically guaranteed employment within their units, and called for greater competition and mobility. It suggested a gradual implementation of the appointment system for professional and technical posts. Scientists and engineers in over-staffed PRIs were encouraged to move to the industrial and agricultural sectors through various means such as job transfer, long-term assignment, and leave without pay. The resolution also gave approval to researchers in PRIs who worked part-time providing technical and consulting services, as long as such work did not interfere with their regular assignments.

It is interesting to note that the reform of China’s innovation system was closely intertwined with the overall economic reform in the country. The fact that the resolution was passed in 1985 is no accident. Less than a year earlier, the Central Committee of the Communist Party of China had passed a resolution calling for economic reform in urban areas. Moreover, the success of economic reform in the agricultural sector and the booming of township enterprises had generated a great demand for science and technology inputs that could not be met by the former national innovation system. This unfulfi lled demand was one of the major forces behind the 1985 resolution (Zhao, 1986).

It would be wrong to assume that the 1985 resolution was the only important policy document related to China’s innovation system reform. In fact, there were probably hundreds of government mandates, provisions, and laws issued from 1985 to 1995, many of which had signifi cant impacts on the reform process. However, all of them were based on the framework established in the 1985 resolution.


87


The 1996 strategy of ‘revitalizing the nation through science and education’

At the National Science and Technology Conference in May 1995, the Chinese Government further clarifi ed its strategy of using science and education to develop the country. Science and technology were regarded as a primary driving force for economic development. Government policy was to strengthen the role of science, technology, and education in economic and social development, to promote the commercialization of scientifi c and technological achievements, and to enhance the scientifi c and cultural literacy of the whole population (Zhao et al., 1999; Sun, 2005).

To comprehensively implement the strategy, the State Council issued another resolution in 1996 on ‘revitalizing the nation through science and education’. This emphasized the need to push for further structural reforms to the science and technology system during the 9th Five-Year Plan 1996–2000. The resolution aimed at boosting the economy through the development of science and technology, with further emphasis being put on three areas: institutional reform, talent development, and research institute management reform. By June 1999, 242 key research institutes had been restructured into enterprises. In support of the Law on Science and Technology Progress, passed in 1993, the Law on Promoting the Transformation of Scientifi c and Technological Achievements was issued in 1996 to accelerate the transformation of technological achievements into economic outcomes (Zhao et al., 1999).

National programmes to support general policies in promoting science and technology for economic development

The policy developments described above would have been useless if there were no specifi c programmes to support them. Since the fi rst wave of reform in the mid-1980s, a set of national programmes were developed to support a three-tier science and technology development strategy, formulated concurrently with the structural reforms of the national innovation system (Zhu, 1990; SSTC, 1990; 1992). The fi rst tier was the so-called ‘main battlefi eld’, where roughly two-thirds of China’s scientifi c and technological capabilities and resources were mobilized


88


to directly serve China’s economic development. At the second tier, a reasonable amount of China’s R&D capabilities and resources were employed to follow the development of high technologies in the global market and to develop the country’s own high technologies. At the third tier, a small but strong contingent of the most creative scientists and engineers were deployed to work on the frontier of basic research. Since the late 1980s, the SSTC and other government ministries have developed certain national programmes within each tier.

These development programmes are critically important to the structural reform of China’s innovation system. They provide new opportunities for research entities to adjust to the funding cuts resulting from the reform of the appropriation system. Even though funding for many of these programmes came from the central government, PRIs were no longer ‘entitled’ to funding to conduct research in these programmes. They had to compete, and often collaborate, to obtain funds to conduct research in these programmes, which are application-oriented. Participating in these research programmes also contributed to creating horizontal linkages between PRIs and other sectors of the economy. In the following discussion, we provide a general description of these programmes.

The ‘main battlefi eld’ of economic construction

Key Technologies R&D Programme: This programme was initiated in 1982 with the objective of pooling fi nancial and well-trained human resources to work on technologies critical to the nation’s current and future economic and social development. As part of this effort, the number of projects as well as the funding support have witnessed a rapid increase over the past two decades (Figure 2.17).

Almost half of the funding was appropriated by the central government, which has kept up a rapid and stable increase since 2002 (Figure 2.18), when investment showed steep growth. Meanwhile, a public peer review system has been developed to allow research institutions nationwide to compete for each project.


89


Figure 2.17 Key Technologies R&D Programme (1982–2004)

50045040035030025020015010050

0

180160140120100806040200

1982–1985

Number of programmes

billion yuan

Total investments

3876

181251

464

162.22

22.997.4

2.5

1986–1990 1991–1995 1996–2000 2001–2004

Source: www.gongguan.jhgl.org and www.most.gov.cnNote: Each programme can be subdivided into many projects. Between 1996 and 2000, for example, 251 programmes were divided into more than 5,100 projects.

Figure 2.18 Funds from central government for the Key Technologies R&D Programme (1996–2004)

1.6

1.4

1.2

1.0

0.8

0.6

0.4

0.2

01996 1997 1998 1999 2000 2001 2002 2003 2004

Funds from the central government

billion yuan

1.17

1.04

0.54

1.03 1.061.06

1.25

1.46

0.52



http://www.gongguan.jhgl.org



90


Since it was formally launched, the Key Technologies R&D Programme has made signifi cant progress in accelerating the growth of agricultural industry through use of science and technology, in updating technologies in traditional industries, in developing the heavy equipment and machinery industry, in improving the environment, and in enhancing the quality of medical services.

Spark Programme: Formally launched in 1986, this programme promotes economic development in rural areas through the application of scientifi c and technical knowledge. By the end of 2004, close to 144,154 projects had been approved across China, with a total investment of 492.987 billion yuan. In 2004, the programme’s commercial value had reached 155 billion yuan; profi t and tax amounted to 34.1 billion yuan; and foreign exchange had reached US$3.21 billion.

National Science and Technology Achievement Diffusion Programme: Initiated in 1990, this programme promotes the diffusion of advanced, appropriate, and mature science and technology results to the agricultural and industrial sectors. It is organized at the national, local, and industrial sector levels. From 1990 to 2004, 4,218 projects were enlisted in this programme, bringing a large number of R&D results to the market and making important contributions to economic and social development. In 2004, by implementing 340 pieces of key technological achievements, the programme generated an additional production value of 26.961 billion yuan, and an additional profi t and tax of 8.559 billion yuan.

Innovation Fund for Small and Medium-sized Enterprises (Innofund): The Innofund is a special government fund set up in 1999 with the approval of the State Council. It facilitates and encourages the innovation activities of small technology fi rms and the transformation of research achievements by means of fi nancing.

With an explicit purpose to support the technological innovation activities of small technology-based fi rms and facilitate the transformation of R&D results, Innofund is different from other non-governmental funds or commercial venture capital in three respects. First, it is a policy-oriented device aimed at the development of new and high-tech


91


industries by encouraging the innovation activities of technology-based SMEs. Second, it serves as a mechanism to attract more investment to technology-based SMEs from local governments, corporations, and fi nancial institutions. Finally, Innofund does not aim at profi t-making per se, but rather at commercializing R&D results and creating jobs. By design, Innofund provides three forms of funding: grants, subsidies for loan interests, and equity investment according to the specifi c project characteristics (www.innofund.gov.cn).

From 1999 to 2004 (Figure 2.19), Innofund approved 6,410 projects with a total investment of 4.289 billion yuan, the average investment amount for each project being around 700,000 yuan.

Figure 2.19 Innovation fund for small technology-based fi rms (1999–2005)

1,089872 1,008

780

1,1971,464 1,552

0.816

0.6590.783

0.540 0.664

0.827

0.988

Number of projects being funded Funds allocated

billon yuan1,800

1,600

1,400

1,200

1,000

800

600

400

200

0

1.2

1.0

0.8

0.6

0.4

0.2

01999 2000 2001 2002 2003 2004 2005

Source: www.innofund.gov.cn

Innofund has empowered small technology-based fi rms with strong dynamics for development. Of the fi rst group of Chinese SMEs to be put on the Shenzhen Stock Exchange in June 2004, half of the eight fi rms had received support from Innofund. Meanwhile, by 2004 (when the fund was celebrating its fi fth anniversary) the fi nal results of 1,690 projects had been evaluated and accepted by Innofund. Altogether, they provided over 106,000 job opportunities, increasing revenue by 42.88 billion yuan and tax paid by 4.76 billion yuan, up 5.2 times and


http://www.innofund.gov.cn


92


6 times respectively from the initial numbers when the projects had just been approved.

High-tech areas

The High-Tech Research and Development Programme (863 Programme) aims at:

• monitoring international high-tech development to determine areas for breakthroughs where China has existing strengths,

• training a new generation of world-class scientists and engineers,• commercializing R&D results to lay a solid foundation for the

formation of new high-tech industry.

The programme selected seven priority areas for further development and has gained momentum in recent years (www.863.org.cn). By 2004, it had supported 9,853 projects. Indeed, particularly since entering the twenty-fi rst century, the development of the 863 Programme has witnessed a rapid increase. At 4,653, the number of projects begun in the fi rst four years of this century is close to the total number of its fi rst 15 years (Figure 2.20).

Figure 2.20 Number of projects in the 863 Programme (1986–2004)

5,200

1,2591,028

1,2961,070

4,653

1986–2000 2001 2002 2003 2004 2001–2004

Number of projects

6,000

5,000

4,000

3,000

2,000

1,000

0

Source: www.863.org.cn


http://www.863.org.cn



93


By 2004, China had granted more than 2,000 patents both at home and abroad, published over 47,000 articles, and achieved an additional production value of more than 56 billion yuan based on the projects supported through the 863 Programme. The implementation of the programme has led China to catch up with international frontiers in such areas as communication equipment, high-performance computers, the Chinese information processing platform, crystal research, and photoelectrons. This has laid important foundations for the development of relevant industries.

Another feature of the 863 Programme in recent years is the progress made in research productivity. In the year 2004, for instance, although the number of projects was just 20.58 per cent of that between 1986 and 2000, the number of patents granted and articles published stood respectively at 321.2 per cent and 55.08 per cent of those numbers for the last 15 years (Figure 2.21).

Figure 2.21 Achievements of the 863 Programme (1986–2004)

Patents Published articles

2,000 1,7654,555 6,424

22,00047,000

7,76215,585

25,886

70,000

0

5,000

10,000

15,000

20,000

25,000

1986–2000 2002 2003 2004 2001–20050

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Source: www.863.org.cn and www.most.gov.cn

Torch Programme: This programme is designed to commercialize high-tech R&D results and develop new and high-technology industries in China. The State Council approved it in August 1988 and the Ministry




94


of Science and Technology took charge of implementing it. Compared with the 863 Programme, the Torch Programme focuses more on the commercialization, industrialization, and internationalization of new and high technologies. Thus, the technologies it concentrates on are not necessarily cutting-edge, but closer to market needs. One of the programme’s objectives is to plan and coordinate China’s new high-tech industrial development zones. At the end of 2004, there were 38,565 enterprises in operation in 53 such zones at the national level across China, 2,844 of which had achieved an annual revenue of over 100 million yuan; the total number of employees in these zones had reached 4,484,387, with a yearly growth of 13 per cent.

Major achievements have also been made in the economic sectors through the implementation of the Torch Programme. From 2001 to 2004, the average annual growth rate of the revenue, industrial added value, and tax in these zones was 31.83 per cent, 28.37 per cent, and 24.63 per cent respectively (Figure 2.22).

Figure 2.22 Achievements of new high-tech industrial development zones (2001–2004)

1,192.72

1,532.64

2,093.87

2,746.63

262.05 328.61436.14 554.21

64.03 76.64 99 123.960

0.5

1

1.5

2

2.5

3

2001 2002 2003 2004

billion yuan

Revenue Industrial added value Tax

Source: www.chinatorch.gov.cn


http://www.chinatorch.gov.cn

95


Basic research fi elds

Basic research lays the groundwork for the sustainable development of science and technology. To maintain stable growth in basic research in China, the government has been increasing its support in recent years. In 2005, the total amount allocated for basic research in the country was 13.5 billion yuan, over 19 times the fi gure of 1991.

State Key Laboratory Programme: To support basic research, China has allocated funds to set up state key laboratories since 1984. Prior to 2004, 158 key labs were set up around the country, involving more than 9,660 researchers. After over two decades of construction, these key labs have become one of the most important mechanisms in China for cultivating talents and generating technological breakthroughs. In 2004, the laboratories undertook 12,030 projects, with cumulative funding of 2.86 billion yuan; in the same year, they published 35,235 articles both at home and abroad, 43.3 per cent of which were catalogued by SCI and 9.6 per cent by EI. Meanwhile, these laboratories granted a total of 8,194 master’s, doctorates, and post-doctorate degrees.

The National Natural Science Foundation of China (NSFC) was founded in February 1986 with the approval of the State Council. This institution manages the National Natural Science Fund, aiming at the promotion and fi nancing of basic and some applied research in China. In accordance with the state guiding principles, policies, and plans for the development of science and technology, NSFC has formulated an effective evaluation mechanism based on a peer review system for the selection of proposals. NSFC has always enjoyed strong support from the government and various departments concerned. Its annual budget has been increasing over the years, representing a big leap from 80 million yuan in 1986 to over 2.7 billion yuan in 2004 (Figure 2.23), contributing greatly to the development of basic research in China.

The National Basic Research Priorities Programme (‘Climbing Programme’) was initiated in 1992 to strengthen China’s basic research in selected areas, improve the quality and ability of China’s scientists, and lay a solid foundation for China to handle signifi cant problems in economic and social development in the future. Prior to 2004, 369 projects were implemented with 1.23 billion yuan invested.


96


Meanwhile, 10,749 papers have been published, 37.69 per cent of which were published overseas.

Figure 2.23 Total funds of the Natural Science Foundation of China (1991–2005)

6.4

1.591.97 2.05 2.25

2.7

0

1

2

3

4

5

6

7

1991–2000 2001 2002 2003 2004 2005

billion yuan

Total funds

Source: www.nsfc.gov.cn

National Basic Research Programme (973 Programme): The backbone of China’s basic research, the 973 Programme was approved by the Chinese Government in June 1997 and is organized and implemented by the MOST. The programme was created on the basis of existing research activities and deployments supported by the NSFC and other sources, to organize and implement basic research to meet the nation’s major strategic needs. It mainly aims at:

• conducting multidisciplinary and comprehensive research and providing theoretic and scientifi c foundations for solving important scientifi c questions regarding the development of the national economy and society as well as of science itself;

• deploying relevant, important, and explorative basic research studies;

• nurturing a new generation of talents with high scientifi c qualifi cations and creative capabilities;

• building a group of high-level interdisciplinary scientifi c research centres (www.973.gov.cn).


http://www.nsfc.gov.cn

http://www.973.gov.cn

97


Between 1998 and 2005, the 973 Programme approved 229 projects. Moreover, during the 10th Five-Year Period (2001–2005), 78.2 per cent of the chief scientists appointed for the implementation of projects were aged below 45. The 973 Programme receives the largest investment from the central government of all China’s basic research programmes. On average, a project receives between 20 to 30 million yuan over a span of fi ve years.

China’s universities have played the most dynamic role in the implementation of the 863 and 973 Programmes. During the 10th Five-Year Period, universities undertook about 38 per cent of 863 Programme projects, ranking top among research entities (Figure 2.24). Meanwhile, among the chief scientists appointed for the implementation of the 973 Programme, 49.5 per cent were working in universities (Figure 2.25). By 2004, of the total funds deployed to the 863 Programme, 45 per cent were deployed to universities. University personnel active in the 863 Programme accounted for a quarter of the total. Meanwhile, with support from the 863 Programme, universities also set up joint research centres with other entities, further promoting the fl ows of knowledge as well as formulating a brand new pattern for joint research.

Figure 2.24 Deployment of the 863 Programme by type of performers

38%

31%

28%

Others3%

Universities

Research institutes

Enterprises

Source: www.most.gov.cn



98


Figure 2.25 Distribution of chief scientists being appointed to the implementation of the 973 Programme (2001–2005)

Research institutes43%

Others7.5%

Universities49.5%

Source: www.973.gov.cn

Knowledge Innovation Programme

The Knowledge Innovation Programme (KIP) is a unique government initiative in its own right. Unlike previously described programmes that are open to all research entities around the country, KIP is a reform and funding programme targeted at the research institutes of the CAS.

As described by Suttmeier, Cao, and Simon (2006: 58): In 1998, when KIP was initiated, CAS supported 120 institutes, many

of which had overlapping missions and outdated research agendas. Most institutes were overstaffed with non-research personnel. They had a larger share of scientists who had passed their peak productivity and lagged behind international research frontiers. Research programmes were often derivative of foreign science, physical facilities were typically run down, and the quality of equipment was very uneven.

In order to address these problems, KIP’s goals include:

• creating 30 internationally recognized research institutes by 2010, with fi ve recognized as world leaders;

• forming a vigorous training and nurturing system for science and technology talents;

• reconstructing CAS into China’s major incubator for the development of high-tech industries, with an optimized mechanism for the translation of science and technology results into productivity



99


as well as the production of research achievements and scientifi c personnel;

• establishing CAS as a governmental think-tank for developing important science and technology policies and decision-making, with high-quality scientifi c consultations and deliberations on the strategies and policies concerning national economic and social development as well as the nation’s science and technology advancement;

• cultivating an innovative culture in CAS, with an open scientifi c research network and free, open access to the abundant knowledge resources and research facilities (www.cas.ac.cn).

After almost ten years, KIP has made substantial progress, acquired experience useful for the construction of China’s national innovation system, and upgraded the country’s overall science and technology strengths. In addition, it has been successful in building up the country’s contingent of science and technology professionals and building CAS into an R&D body of international repute.

KIP has had a series of positive effects on CAS. First, KIP allowed CAS to restructure many of its research institutes. Research institutes specializing in technological development have been transformed into shareholding entities in line with modern enterprise systems. This was similar to the reforms carried out in other PRIs since the late 1990s. In addition, many other research groups were realigned and organized to reduce duplication. As a result, the number of CAS-affi liated institutes was scaled back to 89 by 2005. In individual institutes, traditional disciplinary orientations and missions have been redefi ned and become more focused (Suttmeier, Cao, and Simon, 2006).

Second, after years of arduous work of institutional restructuring, CAS has stepped up its efforts and achieved remarkable results in managerial and operational innovation, reshaping its systems for human resources, salaries, evaluation, allotment of R&D resources, and administration of state assets. As reported by Suttmeier, Cao, and Simon, [r]evitalization of the human resource base in CAS has been

approached by recruitment of talented people and laboratory leaders from ‘brain drain’ scientists working abroad and from young researchers in China. The ‘100 Talents’ Program[me], for instance,



100


offers high salaries, responsible positions, and generous start-up research support to promising scientists under 45 years old. Between 1998 and 2004, 899 researchers were recruited using this mechanism, 778 of whom were working overseas (392 of these had doctorates from foreign universities). The academy also expanded its graduate training, with total enrollment as of the end of 2004 reaching some 33,000 at its institutes, its graduate school, and its University of Science and Technology Campus. A CAS university centre in Beijing is now under construction (Suttmeier and Cao, 2006: 58).

Third, in order to utilize available resources more effectively and make full use of KIP funds, CAS adopted a principle for resource deployment in consideration of the innate characteristics of various science and technology activities, namely ‘encouraging development and innovation, making unifi ed planning with emphasis on major issues, providing support on the basis of competition, and practicing optimized deployment and dynamic regulation’ (www.cas.ac.cn). In the management of KIP’s funding, CAS headquarters retained 30 per cent, with the remainder going to the institutes. Such a funding policy has given institutes considerably more discretion in research management (Suttmeier, Cao, and Simon, 2006). The infusion of KIP funding has made CAS much more competitive than universities and other government research institutes, which have to rely to a far greater extent on competitive funding from contracts and external grants.

Legislation on the protection of intellectual property rights

China’s intellectual property protection system originated from and developed as a result of the country’s reform and opening-up policy. China’s Patent Law came into effect in 1985, with two amendments in 1992 and 2000. The Patent Offi ce of the PRC (CPO, the predecessor of SIPO), was founded in 1980 to protect intellectual property, encourage invention and creation, help popularize inventions and their exploitation, promote progress and innovation in science and technology, and meet the needs of socialist modernization. In 1998, with the restructuring of the government agencies, CPO was renamed the State Intellectual Property Offi ce of the PRC (SIPO) and became a government agency directly under the control of the State Council (SIPO, 2002).



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According to the Patent Law, the government aims to protect:

• invention patents – any new technical solution relating to a product, a process or improvement thereof,

• utility models – any new technical solution relating to the shape, structure, or combination of a product fi t for practical use.

Meanwhile, no patent right shall be granted to:

• scientifi c discoveries, • rules and methods for mental activities, • methods for the diagnosis or treatment of diseases of a human

being or animal,• animal and plant varieties, or • substances obtained by means of nuclear transformation.

Details have also been prescribed in terms of application fi ling, examination procedures, responsibilities of the Patent Re-examination Board, and the administrative channel for the protection of patent rights (SIPO, 2004). Among other responsibilities, SIPO is mainly in charge of drafting revisions of Chinese Patent Law and implementing regulations as well as formulating related intellectual property regulations.

CPO received the fi rst application for a patent on 1 April 1985. In the same year, 14,372 applications were received. Even since the Patent Law was enacted, in particular between 1994 and 2004, the number of patent applications fi led to SIPO has increased greatly, with an average growth rate of 16.57 per cent annually (Figure 2.26). During the same period, the accumulated number of patents granted by SIPO was over 1,074,000, with the total number in 2004 exceeding 190,000.

The technology market

Initially, China’s technology markets mainly consisted of offi ce buildings or exhibition halls in which research institutions could rent space to show their R&D results to potential buyers. Later, technology transfer broker fi rms also began to set up offi ces in these markets, often equipped with computer networks and databases offering services to link technology suppliers to their potential customers. As the number and size of technology markets around the country grew, so did the number of disputes and legal battles. Against this background, China’s


102


Technology Contract Law came into effect on 1 November 1987. Due to the complexity involved, the SSTC issued a document at the same time that attempted to clarify how to implement the law. A few months later, the SSTC issued a temporary mandate on the management of technology contracts, complementing the Technology Contract Law. After a year’s trial, the SSTC issued formal Implementation Provisions for the Technology Contract Law in March 1989. Still, six more documents were issued by the SSTC between March 1989 and 1991 to deal with issues related to technology markets, from management of technology shows to registration of dispute arbitrators (Xue, 1997).

Figure 2.26 Patent applications fi led and patents granted by SIPO

Patent applications Patents granted Year-on-year growth of applications

1994

24.10%

27.61%

24.02%

21.74%

19

19.30%

10.68%9.849%

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

40

35

30

25

20

15

10

5

0

0.30

0.25

0.20

0.15

0.10

0.05

0

6.41%7.8

4.3 4.5 4.4 5.16.8

10 10.511.4

13.2

18.2

8.3

10.311.4

12.2 13.4

17.1

20.4

25.3

30.8

35.4

7.02%

14.94%

cases (in 10,000) %


The establishment of technology markets has enabled universities to interact directly with the industrial sector by means of technology transformation and consultation. Meanwhile, government’s role has changed from that of a direct participant in technology transformation to that of a benefactor that encourages such interaction. Figure 2.27 shows the deals China’s universities have made in the domestic technology



103


market since 1998. In seven years, universities accounted for over 13.5 per cent of the total deals in the technology market and more than 11.2 per cent of the total value achieved in the market. It can also be seen that since 2000, the average yearly value for technological contracts has remained at over 230,000 yuan.

Figure 2.27 China’s universities in the domestic technology market (1998–2004)

39,28937,974

31,25731,202

190,435

32,705

40,568

10,669.457,264.238,640.67

11,052.82

6,228.195,176.75

127,607

232,403

280,967292,379

29,553

354,234

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

1998 1999 2000 2001 2002 2003 2004

item/million yuan

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000yuan

Number ofcontract deals

Total value of contractual deals

Average value for each deal

296,814

11,661.53


New national and high-tech development zones

The establishment of high-tech development zones has provided professors and researchers in universities and research institutes with a platform to step out of their laboratories and directly commercialize their R&D results. In 1980, Chen Chunsheng, a researcher with CAS, founded China’s fi rst private technical enterprise in the Zhong Guancun district, where the number of technological enterprises subsequently increased to 148 in 1987. Central government took notice, and approved the city of Beijing’s application of May 1988 to formally launch the Beijing Experimental Zone for the Development of New Technology



104


Industries. This initiative was aimed mainly at encouraging people in research institutes and universities to start up their own companies for technology development, by providing an environment conducive to such endeavours. By the mid-1990s, the number of new national and high-tech development zones in China reached 53, the majority of which are located adjacent to universities where plenty of research resources can be fully utilized and technological achievements easily commercialized (Fan and Fang, 2004).

2.6 Conclusions

In previous sections, we have reviewed China’s economic reforms, the changing roles of its universities in its national innovation system, and the various ways in which universities and the market interact. We have also analysed various forces that shaped the current relations among universities, the market, and the government in China. In particular, we examined a number of government policies and programmes in promoting the development of the science and technology base, innovation activities, and commercialization, and how such initiatives impacted the behaviour of universities and their relationships with industry.

First of all, economic reform and other related reforms in China have changed the overall environment in which universities, the market, and the government interact. Over the last two decades, the Chinese government has not only initiated some major policies to reform its innovation system and introduced market instruments: it has also set up many programmes to complement these policies. These programmes were somewhat systematic and wide-ranging, so that different institutions and sectors could benefi t from their implementation. More importantly, the implementation of these programmes has often induced changes in institutional culture. For example, many national programmes aimed at supporting basic research or solving key national bottlenecks were not automatically allocated to research institutes or universities. Rather, a competitive system based on peer review was adopted.

Moreover, the government is no longer the sole source, or even the major source of funding for university operations. These must fi nance their operations through multiple channels, including charging tuition


105


and providing services to industry. Nor is the government the main employer of university graduates, who have to fi nd jobs for themselves in the new economic environment. While the Ministry of Education still plays an important role in administering the university system and providing partial funding for universities’ educational services, it mostly has to rely on indirect policies rather than on direct fi nancial measures with regard to universities’ research function. Increased enrolment in the Chinese higher education system in recent years has generated new dynamics that will further complicate relationships between government and universities.

At the same time, China’s innovation system has undergone important structural change. PRIs are no longer the main R&D service providers; universities are in most cases equal competitors in the market. In addition to the public research programmes set up by the government, the rapid economic growth and weak industrial R&D capabilities from the mid-1980s to late 1990s created strong demand for applied industrial research and services. Universities and PRIs learned, adapted, and created many ways of collaborating with industry and fulfi lling the roles expected by industry. However, as the industrial R&D capabilities of Chinese fi rms improve, industry’s expectations of universities and PRIs are also becoming more demanding. These changing environments and market conditions have brought new challenges to universities.

The evolving relationship of universities with the market is not without controversy, however. Some have argued that some of the reforms and programmes related to academia–industry interactions have gone too far by mixing the market with academia, poisoning the academic environment, and distorting research directions in the long run. Such critiques are not without foundation. The potential downside of over-emphasizing university linkages with the market was highlighted in recent years, when the leadership of several prominent universities was implicated in commercial scandals. While a systematic evaluation of the trade-offs of the policies and programmes in academia–industry interactions would be diffi cult, the warning signs should be taken seriously.


106


The analysis made in this study has also shown that government needs to focus on its role as a facilitator and coordinator, and tackle issues such as:

• improving public infrastructures for innovative activities such as setting up the technology market, creating incubators and regional technical service institutions, and building up an information network to provide technological services;

• improving the policy environment for innovation through fi nancial and tax incentives, better protection of IPR, fostering more science and technology talents, etc.;

• improving market and public institutions, such as setting up and enforcing anti-trust legislation, making the government’s functioning more transparent, and developing better systems for evaluating research results.

The division of labour among different players in China’s innovation system also needs to be further clarifi ed according to their comparative advantages in R&D activities. The central role enterprises play in innovative activities needs to be further recognized. In addition to encouraging business to increase investment in R&D through tax incentives, the government may also provide incentives to encourage collaboration between industry and universities and research institutes. Ultimately, the government should focus its attention more on basic research and on those research activities related to the general public’s interest, such as the environment, health, and national defence.

Funding for basic research in China, particularly for basic research in universities and colleges, needs to be increased substantially. This is not only because of the comparative experience of OECD countries, but also due to the outstanding performance by China’s universities and colleges in research output, despite their relatively lower input in basic research. China’s universities and colleges must give greater importance to basic research and must further strengthen their cooperation with independent research institutes.

In conclusion, historical and institutional rationales fostered the emergence of the landscape of university–market–government interactions in China today. Such interactions in general have made a signifi cant contribution to the growth of China’s economy and, in


107


particular, the growth of the country’s high-tech industry. At the same time, with the continuing reform of China’s national innovation system and the development of its industrial R&D capabilities, the knowledge gap between academia and industry will become narrower. Various linkages and channels developed over the years between universities and the market will be under new scrutiny from both universities and their partners. It is encouraging to see that many universities have begun to re-examine their practice in collaborating with industry and in how they manage university-affi liated enterprises. Government policies have also shifted from general support towards a more cautious regulatory mode. The policy and managerial challenge is to help universities, industry, and government to redefi ne their roles in this new environment and forge a new partnership for continued reform and development in China in the coming years.


109

III. ACADEMIA–INDUSTRY–GOVERNMENTINTERACTION: A CASE STUDY IN POLAND

Monica Kondratiuk-Nierodzinska and Agnieszka Olechnicka

3.1 Introduction

Poland has undergone many changes since the early 1990s. The process of transition from a centrally planned economy, the main purpose of which was to introduce free-market forces into the national economy, began with radical socio-economic reforms. Today, after 15 years of building market institutions, Poland’s experiences with economic and institutional change can be assessed. Successful achievements can be noted in several fi elds, such as the liberalization of the economic system, the creation of a market institutional structure, and macroeconomic stability. The educational system has also undergone many transformations. Many private schools and universities have been created since the mid-1990s, giving a large number of young people access to tertiary education.

The prospect of European Union (EU) membership in 2004 forced Poland’s policy-makers to pay more attention to issues of national competitiveness and innovativeness. In the last decade, a signifi cant number of policy documents infl uencing the development of innovation in Poland have been developed. In addition, regional governments have been encouraged to build regional innovation systems by creating and carrying out innovation strategies in which the promotion of academia–industry interaction is one of the most important issues.

Responsibilities for innovation policy in Poland have been divided among three ministries: the Ministry of Scientifi c Research and Information Technology (MNiI), Ministry of Economy and Labour (MGiP), and Ministry of Education and Sports (MENiS). This division of responsibilities is seen as the main drawback of the Polish national innovation system.

Academia–industry interaction is infl uenced not only by national policy and government actions, but also by the specifi c characteristics


110


of the higher education and business sectors in Poland. It is important to note that most universities in Poland’s higher education sector focus only on teaching; very few institutions dedicated to research exist. If research activity is undertaken, it is mainly basic research with little or no regard for possible future business applications. Institutions of higher learning in Poland are therefore rarely seen by enterprises as cooperation partners.

As for Poland’s business sector, well over 90 per cent of enterprises belong to the small and medium enterprise (SME) category. Research has shown that one of the biggest problems faced by SMEs in Poland is the lack of adequate fi nancial resources for conducting innovation activities. This is considered the main reason for their reluctance to participate in costly in-house research and development activities.

The above are the main issues that have prompted discussions about how academia–industry cooperation can increase the innovative nature of the Polish economy. It is widely recognized that academia–industry interaction should form the central part of national and regional innovation systems in Poland. This study will present past and recent developments in national policy regarding academia–industry interaction, as well as assessing their possible contribution to the economic development of the country.

3.2 Poland’s economic system and policy

Economic structure

According to the number of registered enterprises, Poland’s economic structure is dominated by wholesale and retail trade, repair of motor vehicles, motorcycles, and personal and household goods (33.4 per cent of registered economic units); real estate, renting and business activities (15.6 per cent); manufacturing (10.6 per cent – 10.8 per cent together with other industrial sectors); and building and construction (10 per cent). A total of 2,259,796 enterprises (73.34 per cent) registered in June 2004 dealt with trade, transport, or other market services.

In recent years, market services have also generated the most economic growth as indicated by gross domestic product (GDP) and gross value added, as shown in Table 3.1. This sector has also been the most stable area of the Polish economy, registering constant growth


111

Academia–industry–government interaction: a case study in Poland

over the past decade. Its infl uence on the national economy was especially apparent in the period 2001–2002, when Poland experienced an economic slowdown due to the sector’s weaker dynamics (see MGiP, 2004b: 53).

Table 3.1 Dynamics of gross domestic product and gross value added in 2000–2005 (average prices compared with the previous year, previous year = 100%)

Year 2000 2001 2002 2003 2004 Q1 2005Gross domestic product 104.0 101.0 101.4 103.8 105.4 102.1Gross value added 103.7 101.1 101.3 103.7 105.1 102.2– Industry 106.5 99.7 99.8 106.3 109.7 105.3– Construction 100.0 92.1 93.2 97.1 98.7 102.5– Market services 104.2 102.8 103.7 103.6 104.5 102.1

Source: Central Statistical Offi ce (GUS) data: www.stat.gov.pl

The acceleration of economic growth in 2003 was determined by the positive infl uence of both industry and market services, while construction remained a hindering element (this had been the case since the third quarter of 2000). Before and after joining the EU, in 2003–2004, Poland experienced considerable GDP growth rates. However, the economy seems to have been slowing down since the beginning of 2005.

The majority of the enterprise sector in Poland (95.2 per cent of all enterprises registered in June 2004) consists of micro-fi rms employing nine or fewer people. Small enterprises with 10 to 49 employees account for 3.9 per cent, while medium-sized fi rms with between 50 and 250 employees account for only 0.8 per cent of the total number of fi rms. This means that the SME sector in Poland consists of 99.86 per cent of the total number of registered enterprises. Large enterprises employing 250 people or more represent only 0.14 per cent of the whole enterprise sector in Poland.

The largest group of micro-enterprises (34.2 per cent) are registered in wholesale and retail trade, repair of motor vehicles, motorcycles, and personal and household goods. SMEs as well as large enterprises employing 250 people or more are mainly involved in manufacturing


http://www.stat.gov.pl

112


activities (21.9 per cent of small enterprises, 27.1 per cent of medium enterprises, and 35.7 per cent of large enterprises).

Increasing privatization means that 93 per cent of the Polish enterprise sector is composed of private fi rms. However, the private enterprise sector is showing a downward trend in the number of fi rms, while the public sector is growing. This is also true of public medium and large enterprises; again, this is mainly due to the privatization process. It is micro-fi rms that are mainly responsible for the registered drop in the number of private enterprises (GUS, 2007).

The use of technology in the form of automation equipment increases with the size of the enterprise. In 2003, only 16 per cent of medium fi rms employing 50 to 249 people used computers to control and regulate technological processes, while in the case of large enterprises with 250 to 499 employees, computers were used by 39.3 per cent, and in those with more than 500 employees, by 57.4 per cent (GUS, 2003: 122).

A total of 5,923 surveyed Polish fi rms used a local area network (LAN), 7,696 used the Internet, and 5,943 had their own websites (GUS, 2003: 125).

According to the third Community Innovation Survey data (covering the years 1998–2000), only 6.7 per cent of all surveyed enterprises were engaged in research and development (R&D) activities, as shown in Table 3.2. Mining and quarrying companies turned out to be the most active in R&D activities – almost 13 per cent of them conducted R&D, of which 42 per cent did so on a regular basis. Foreign-owned fi rms accounted for 8.6 per cent of all surveyed fi rms and mixed ownership fi rms for 3.7 per cent. Almost one fi fth (19.5 per cent) of foreign-owned fi rms carried out R&D activities, compared with nearly half (48.7 per cent) of mixed ownership fi rms (KOITA, 2002: 27, 42).

As in other countries, small and medium-sized fi rms in Poland are statistically the least active in R&D activities. In the period 1998–2000, only 3.4 per cent of SMEs were engaged in R&D, of which only 29 per cent did so on a regular basis. In comparison, 10 per cent of medium and 28.6 per cent of large enterprises conducted R&D


113


activities, of which 40 per cent of medium and 60 per cent of large fi rms did so on a regular basis.

Table 3.2 Engagement of Polish enterprises in R&D in the years 1998–2000

Enterprises Engaged in R&D

Engaged in R&D on regular basis

Engaged in R&D occasionally

Total enterprisesnumber 1,885 796 1,089

% 6.7 2.8 3.9

Mining and quarryingnumber 19 8 11

% 12.9 5.4 7.5

Manufacturingnumber 1,833 775 1,057

% 6.7 2.9 3.9

Recyclingnumber 3 2 1

% 2.2 1.4 0.7

Electricity, gas and water supplynumber 29 10 19

% 5.1 1.8 3.4

Source: Central Statistical Offi ce of Poland (GUS), www.stat.gov.pl Note: Percentage fi gures have been rounded off.

The relatively small number of Polish enterprises conducting R&D activities makes for low numbers of patent applications. Among the fi rms surveyed in 1998–2000, only 0.8 per cent of small and 4 per cent of medium and large fi rms applied for a patent (KOITA, 2002: 116). Moreover, research conducted by Poland’s Central Statistical Offi ce (GUS) indicated that Polish enterprises’ innovation activity had deteriorated during the period covered by three consecutive Community Innovation Surveys (1992–2000) and that the gap between the Polish economy and that of the rest of the EU had increased. In 1992, the percentage of innovative companies active in Poland was estimated to be about 62 per cent. In the years 1994–1996 this number decreased to 37.6 per cent. It fell to 26.4 per cent in the period 1997–1999 and reached 16.9 per cent in 1998–2000 (Niedbalska 1999: 265; KOITA, 2002: 41, 49).



114


National and regional policies for economic growth and development

Historical perspective on the role of the state in the economic sector

Prior to 1989, the Polish economy was centrally planned. The two main characteristics of a centrally planned economy are state ownership of the means of production and the non-market allocation of economic resources.

In the case of Poland, state ownership of the means of production was mainly associated with capital goods, less so with land, and to an even lesser extent with labour. However, even with regards to labour, the state used various administrative regulations and control mechanisms. This resulted in considerable ‘nationalization’ of production (for example limiting school admissions, employment, and so-called work orders for graduates).

As far as land ownership was concerned, in the majority of socialist countries the cooperative system formally predominated. In Poland, however, private ownership prevailed. Nevertheless, both of these forms of land ownership were set in a specifi c context. They functioned in a non-market and strongly bureaucratized environment. Large and extremely monopolized state enterprises were the main, and often the only, suppliers of indispensable production goods and raw materials, as well as the recipients of fi nished products both for the production cooperatives and for individual agricultural farms. The state also limited land sale and purchase on a wide scale.

In Poland, even before 1989, the private sector’s main area of activity was agriculture, in addition to services and retail trade. As in the case of land ownership, the environment in which private fi rms functioned was very specifi c due to the vast infl uence of the state on the economy.

The principal features of the Polish centrally planned economy and the role of the state in the economic sector can be summarized as follows:

• centralized management of the economy and planning;


115


• command character of the system (central bureaucracy imposed general aims, detailed tasks, and administrative assigning of production factors including fi nancial resources of fi rms and economic organizations);

• administrative regulation of product prices and production factors; • management subordination of fi rms and economic organizations to

state-party bureaucracy;• centralization of authority to create and reorganize individual

economic units (equivalent to prohibiting management from undertaking this type of activity);

• almost total lack of competition between individual economic entities;

• lack of commercial fi nancial institutions; • large degree of isolation of the economy and enterprises from the

processes and phenomena predominant in the world economy; and enterprises functioning with so-called ‘soft’ budget limitations (regulation and funding of economic activity by the state, which covered its losses and did not allow bankruptcy, administratively established prices and a lack of commercial fi nancial institutions), which resulted in reluctance to act according to principles of effi ciency.

The state was the dominant economic entity in the centrally planned economy. The government defi ned the range of activities of other economic entities as well as the extent to which these were autonomous, and established prices and various other ‘market parameters’. It also infl uenced choices made in the economic sector, especially those of a non-economic character. Under these conditions, enterprises were virtually devoid of economic independence. They were therefore unable to apply the rules of rationality and effi ciency to their economic activity.

The fi rst non-communist government in the post-war history of Poland adopted the Balcerowicz Plan in September 1989. This was an economic programme designed to stabilize the economy, in particular to balance the market and reduce high infl ation as well as to introduce a fundamental transformation of the socio-economic system, which included the privatization of the economy. During this period, the role of the government was very specifi c. It aimed to introduce a market economy through centrally planned actions.


116


Nowadays, the role of the government in the economic sector is limited to dealing with the industrial sector’s most pressing problems (Section 3.2), continuing the privatization process of state-owned fi rms, and creating various economic and non-economic incentive programmes in order to support the development of the private enterprise sector.

Regional industrial development policies

In the context of Poland, it is more appropriate to examine sectoral industrial development policies than regional ones, although some of them are indeed specifi c to the country’s regions where a given industry is located. Regional authorities seldom engage in building their own sector-specifi c industrial development policies. Table 3.3 presents an overview of the main industrial development policy papers issued in Poland in recent years.

A number of industrial development policies concerning, for example, restructuring programmes and strategies, have either been implemented, or have been formulated but are still awaiting implementation in Poland. They concern a number of industrial sectors: hard coal mining, iron and steel, defence, electronics, wood processing, chemicals, pharmaceuticals, light and cellulose-paper, as well as the electric energy and oil sectors.

The most problematic sector in the Polish economy is hard coal mining. Reforms of this sector started in the 1990s. Since then, the government has adopted a number of policies, the most recent ones detailed in the paper titled Restructuring of the hard coal mining sector: 2004–2006 and Strategy: 2007–2010 (Council of Ministers, 2004a, 2004c). In general, the aim of these policies was to enhance the economic effectiveness of this sector’s business entities, so that they would be able to fi nance upgrades and capital expenditure projects with their own funds. Policy-makers also had in mind improving the economic effectiveness of the industry’s exports and reducing employment in order to match production capacity, which in turn should match market demand. As a result of the implementation of these reforms and programmes, it is hoped that mining entities will not have to rely on any public assistance, which is forbidden by international treaties. Currently, this is practically impossible.


117


Table 3.3 Main industrial policy papers issued in Poland (1999–2005)

Title Date of approval of publication

Regions concerned

Restructuring the hard coal mining sector: 2004–2006 and strategy for the period 2007–2010

27 April 2004 Upper Silesia, Lower Silesia, Lublin Region

Activities of the Treasury with regards to the realization of restructuring and privatization programmes in the pharmaceutical sector

26 November 2003 not region-specifi c

Strategy for light industry: 2000–200724 October 2000changed 2 September 2003

not region-specifi c

Strategy for the wood processing industry up to 2006 19 August 2003

not region-specifi c, although it concerns mostly the northern and eastern regions of Poland

Strategic aims for the cellulose paper industry in Poland – perspective up to 2007

23 June 2003 not region-specifi c

Restructuring and development of the iron and steel industry in Poland up to 2006

25 March 2003 Upper Silesia, Lower Silesia, Mazovia region

Treasury ownership policy realization programme for the electric energy sector

28 January 2003 not region-specifi c

Strategy for electronic industry up to 2010 December 2002 not region-specifi cStrategy for the pharmaceutical industry up to 2005 1 October 2002 not region-specifi cRestructuring and privatization programme of the oil sector

24 September 2002 not region-specifi c

Strategy for the chemical industry in Poland up to 2010

4 June 2002 not region-specifi c

Evaluation of the realization and corrections to the directions of energy policy in Poland up to 2020

2 April 2002 not region-specifi c

Integrated schedule of the privatization of the electro-energy sector and the introduction of the electric energy market

16 May 2000 actualization19 June 2001

not region-specifi c

Restructuring programme of the defence sector and support for the technological modernization of the Army of the Republic of Poland

9 February 1999 not region-specifi c

Source: Authors.

The conclusion arising from the above overview of recent industrial policy documents is that the process of economic transformation in Poland is far from fi nished. There are still numerous problems that must be confronted in order for the domestic economy to be able to compete internationally on different product markets. It is also apparent that central


118


government, rather than regional government, is formulating industrial policy. Regional authorities’ role is limited to tackling emerging social problems connected with restructuring and employment reduction in the industries concerned.

Technological and human resource development policies

Formulation of technological development policy remains mostly in the hands of the Ministry of Scientifi c Research and Information Technology (MNiI, formerly the State Committee for Scientifi c Research – KBN). In recent years, the ministry has issued a number of policy documents. Policy documents have also been published relating to the growth of Poland’s innovation activity, issued mainly by the Ministry of Economy and Labour and its predecessors. An overview of technological development and innovation policy documents can be found in Table 3.4.

Table 3.4 Main technological development documents in Poland(1999–2005)

Document title Date of approval of publication

Organization responsible (ministry, etc.)

Directions of state scientifi c, science-technology and innovation policy through 2020

December 2004 Ministry of Scientifi c Research and Information Technology

Strategy for increasing R&D investment in order to achieve Lisbon Strategy Goals

March 2004Ministry of Scientifi c Research and Information Technology in cooperation with Ministry of Economy and Labour

Proposed directions of science and technology development in Poland until 2013

2003 Ministry of Scientifi c Research and Information Technology

Directions of innovation policy until 2002

1999 former Ministry of Economy

Increasing innovation in Poland’s economy through 2006

11 July 2000 former Ministry of Economy, Labour and Social Policy

Aims and directions of the information society

28 November 2000former State Committee for Scientifi c Research and former Ministry of Posts and Telecommunication

e-Poland – Action plan for the development of an information society in Poland

11 September 2001former State Committee for Scientifi c Research and former Ministry of Posts and Telecommunication

Source: Authors.


119


In the documents titled Strategy for increasing R&D investment in order to achieve Lisbon Strategy Goals (Council of Ministers, 2004b) and Directions of scientifi c, science-technology and innovation policy of the state until 2020 (MGiP, 2004a), the Ministry of Scientifi c Research and Information Technology (MSRIT) set out the most important actions to be undertaken in Poland regarding the science and R&D sectors. These are:

• increasing public funding for science as well as enhancement of its effi ciency;

• indicating directions and priorities of Polish science development;• initiating systemic, organizational, and legal changes enabling

effective implementation of scientifi c, science-technology, and innovation policy, as well as supporting the growth of R&D fi nancing from sources outside the state budget;

• developing international cooperation, particularly in the framework of the EU; and

• making the promotion of science a priority.

The document also underlines the need to continue the Foresight Programme initiated in 2003. The main objective of this programme is to indicate the future of the development of science and technology in Poland. The results of the Foresight Programme’s research are intended to verify the chosen research priorities, and will indicate in a more precise manner the path of scientifi c development in the country. Concentration of the scarce public funds on chosen research priorities is intended to help increase effi ciency in spending.

The proposed directions of science and technology development in Poland through 2013 were defi ned in another document issued by the MNiI (MSRIT, 2003). Policy-makers understand that effi ciency in the use of budgetary R&D funds is extremely important considering their scarcity. Applying funding priorities is necessary according to the infl uence of a given research area on the future development of the economy. The document proposes three priorities in line with those proposed in the EU’s Sixth Framework Programme: ‘Info’, ‘Techno’, and ‘Bio’. ‘Info’ includes software engineering, knowledge and decision-making support, intelligent networks, telecommunications, and new generation tele-information networks and optoelectronics. ‘Techno’


120


includes new materials and technologies, nanotechnologies, design of specialized systems, and mechatronics (mechanical and electronics engineering). ‘Bio’ includes biotechnology and bio-engineering, organic food production methods and environmental protection, as well as new medical products and technologies.

After taking into account the specifi c situation of the Polish R&D sector, an additional strategic thematic area was chosen. This was called ‘Basics’, and included the computer sciences, creation of scientifi c information bases, solid body physics, and chemistry.

In both documents, the need to increase state funding for R&D was underlined in compliance with the Lisbon Strategy. Three stages of a successive increase in R&D expenditure are planned.

During the fi rst stage (2004–2006), science expenditure were expected to reach 1.5 per cent of GDP by 2006, of which 0.6 per cent came from the state budget.

The second stage (2006–2010) is called Following the Lisbon Strategy. Two variants are to be taken into account during this stage. The fi rst foresees the achievement of the Lisbon Strategy goals in 2010 – 3 per cent of GDP spent on R&D, of which 1 per cent is from the state budget. The second variant foresees exceeding the present average value of R&D fi nancing in the EU-15 and achievement of the level of 2.2 per cent of GDP on R&D expenditure, of which 0.8 per cent is from the state budget.

The third stage (2010–2013) will be a continuation of the goals set by the Lisbon Strategy. It is understood that the state of the budget would not permit Poland to achieve the Lisbon Strategy goals by 2010. In such a case, the level of 3 per cent of GDP on research and development will be achieved by 2013.

Directions for Polish technological policy can also be found in documents relating to innovation as well as the regional policy of the country.

In 1999, a document titled Directions of innovation policy through to 2002 was issued by the former Ministry of Economy, and in 2000 a government programme entitled Growth of innovativeness of the


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Polish economy until 2006 (Council of Ministers, 2000a) was accepted by the Council of Ministers. Both documents underline the need to establish conditions for increasing the speed of creation and absorption of innovation practices concerning products and processing, as well as management and organization strategies in order to increase the Polish economy’s competitiveness.

The problem of new technology development and adoption was also underlined in such policy documents as the National Development Plan (NDP 2004–2006) and National Development Plan (NDP 2007–2013) (Council of Ministers, 2003c; 2005). During the period 2004–2006, projects related to new technologies and innovation implementation were carried out within the Sectoral Operational Programme – Growth of the Competitiveness of Enterprises (SOP–GCE).

The NDP 2007–2013 aims to support actions related to the creation of Aviation Valley, a series of technologically advanced aviation industry development centres. The project related to the creation of Aviation Valley in the years 2007–2013 will be carried out within the Operational Programme – Territorial Cohesion and Competitiveness of Regions.

Another important direction for technology development in Poland is the creation of its information society. Since 2000, two policy documents have been issued on this matter: Aims and directions of the information society, and E-Poland: Action plan for the development of an information society in Poland by the former State Committee for Scientifi c Research and former Ministry of Post and Telecommunication (KBN, 2000; 2001).

The issue of the creation of an information society was also discussed in the regional policy document entitled National strategy for regional development for the years 2001–2006 (NSRD 2001–2006) (Council of Ministers, 2000c). It is essential to the strategic objective of infrastructure modernization and development, central to the strengthening of regional competitiveness. Full implementation of the projects related to the building of a regional information society will allow for the realization of another strategic aim of the NSRD 2001–2006: the restructuring of the regional economic base and creation of conditions for its diversifi cation. Projects related to the creation of a regional information technology infrastructure from


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2004 to 2006 were carried out within the framework of the Integrated Operational Programme of Regional Development (IOPRD).

Today, discussions concerning the creation of a knowledge-based society are conducted at the national level. The Draft National Development Plan for the years 2007–2013 and National Strategy of Regional Development for the years 2007–2015 take into account the need to promote the creation of a knowledge-based society in Poland by building a system and culture of lifelong learning, increasing the use of e-learning, encouraging widespread access to tertiary education, giving support to local institutions of educational nature, libraries and archives, and fostering close cooperation between education, training, and labour market institutions (on every organizational level) in order to adapt education and training offers to projected labour market needs.

3.3 Overview of Poland’s national innovation system

Poland’s higher education system

In the 2003/2004, 274 private and 126 public higher education institutions (HEIs) operated in Poland. The Ministry of National Education and Sport supervises most public HEIs, including (GUS, 2004b; Ministry of National Education, n.d.):

• universities (17),• polytechnics (18),• economic academies (5),• higher pedagogical schools (7),• agricultural academies (9),• physical education academies (6),• state higher schools of vocational education (30),• theological schools (7),• medical academies (13), and• fi ne arts schools (14).

In addition, the Ministries of National Defence and Internal Affairs supervise ten other HEIs.

Public HEIs train specialists in many areas. Universities provide tertiary education principally in the natural and social sciences. Polytechnics are mainly responsible for technical education and


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providing the economy with engineers. In the 2003/2004, over 70 per cent of all tertiary-level students were enrolled in public HEIs.

The share of the population with tertiary education has increased constantly since the beginning of the 1990s. According to OECD data, 13 per cent of the population aged 45–54 years has a tertiary degree, as does 20 per cent of the population aged 25–34 years (OECD, 2006a). This is the result of growing demand for tertiary education and higher student enrolment rates (Table 3.5).

Table 3.5 Participation rates in tertiary education in Poland

1990–1991 1995–1996 2000–2001 2001–2002 2002–2003*No. of students (in 000s) 403.8 794.6 1,584.8 1,718.7 1,800.5Participation rate in %Net 9.8 17.2 30.6 32.7 35.0Gross** 12.9 22.3 40.7 43.6 46.2

Source: Goldberg, 2004: 63.* Data for 2002/2003 is based on National Census Data.** Note: The gross participation rate is based on the number of students, regardless of age, enrolled at a given level of education divided by the total population that corresponds to the age group specifi ed for that level.The net participation rate is based on the number of students in a specifi ed age group (corresponding to legislated standards) enrolled at a given level of education, divided by the total population in the same age group.

In response to this growing demand, private higher education institutions have been created since 1991. At the beginning of the 2003/2004, there were 274 non-public HEIs providing education for 29.4 per cent of all students. Unlike public higher education institutions, only about 25 per cent of private schools have been legally granted the right to award master’s degrees.

Most private HEIs specialize in educating economists, managers, fi nancial experts, bankers, and sociologists. The technical sciences are covered to a far lesser extent. However, students in many private HEIs acquire skills in commercializing new technologies, innovation management, seeking resources of innovation fi nancing, and establishing innovative companies.

In 1998, higher vocational education schools began to operate. Education in these institutions lasts six semesters, and graduates are awarded bachelor’s or engineering degrees. In the 2003/2004, 166,800 students were enrolled in 151 higher vocational education schools.


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Table 3.6 presents an overview of the number of students enrolled in different courses of studies as well as the number of graduates in the 2003/2004.

Table 3.6 Students and graduates according to the course of studies*

Higher education institutions Students(2003/2004)

Graduates (2002/2003)

Total (000s) 1,858.7 366.1Including (in %): 100 100Pedagogical 11.3 14.3Arts 1.1 0.8Humanities (including theology) 7.8 7.4Social sciences 13.0 14.4Journalism and information 0.7 0.6Economic and administration 23.2 32.3Law 3.1 2.4Biological (including biology, botanics, biochemistry, toxicology, genetics, zoology) 1.8 1.6

Physical (including astronomy, physics, chemistry, geology) 0.9 0.8Mathematics and statistics 0.9 0.8Information technology 2.9 1.6Engineering and technical 9.2 6.4Production and processing 1.7 1.4Architecture and construction 2.9 1.7Agricultural, forestry, and fi shery 1.9 1.7Veterinary 0.2 0.1Medical 3.0 2.1Services for citizens 1.5 1.5Transport services 0.8 0.6Environmental protection 3.0 2.6Safety protection 0.2 0.3All other specialities 9.0 4.6

Source: Central Statistical Offi ce (GUS), 2004b: XXII.* According to the International Standard Classifi cation of Education (ISCED 97).

Enrolment rates show that the most popular courses of studies are economics and administration (23.3 per cent of all students in the 2003/2004), sociology and other social sciences (13 per cent) and


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pedagogy (11.3 per cent). Engineering and technical sciences come in fourth place, with 9.2 per cent of all students.

Most graduates of the 2002/2003 completed courses in economics and administration (32.3 per cent), sociology and other social sciences (14.4 per cent), and pedagogy (14.3 per cent). The engineering and technical sciences came in fi fth place, with 6.4 per cent of all students, preceded by the humanities (7.4 per cent).

Private HEIs are mainly teaching organizations; they conduct research and scientifi c activities to a far lesser extent than their public counterparts (Table 3.7). Polytechnics, universities, and medical academies are responsible for over 80 per cent of R&D spending in the entire higher education sector. Their share of R&D spending is twice as important as their share in the total number of higher education institutions and almost 20 per cent greater than their share in total employment in the sector. Only 21 of over 300 higher private schools perform R&D activities – with their share in total R&D spending representing only about 1 per cent.

Table 3.7 R&D in higher education institutions (2001)

Higher education institutions Number of units

Structure (%)

R&D spending (%)

Employment (%)

Polytechnics 17 14.29 38.21 23.79Universities 18 15.13 29.64 31.66Medical academies 13 10.92 13.87 13.37Agricultural academies 7 5.88 7.65 7.56Schools of Ministries of National Defence and Internal Affairs 11 9.24 6.64 5.67

Economic academies 5 4.20 1.63 4.25Higher pedagogical schools 7 5.88 0.70 3.97Physical education academies 8 5.04 0.47 2.73Higher art schools 14 11.76 0.25 2.65Higher private schools 21 17.65 0.95 4.36Total 121 100 100 100

Source: Rejn, 2003: 140.

The largest proportion of R&D funds was spent on technical sciences (38.8 per cent of total R&D expenditure by HEIs in the country), medical sciences (14 per cent), and mathematics and physics-related


126


sciences (8.5 per cent). Research support activities are fi nanced mainly in the technical, chemical, and biological sciences (Rejn, 2003: 143).

According to the proportion of money spent on production and services, R&D activities are mainly conducted by HEI departments that cover the technical and medical sciences as well as philosophy and sociology. According to the same measure, implementation activities take place almost entirely in technical sciences departments (98.7 per cent of all spending on implementation in HEIs in the country) (Rejn, 2003: 143).

Institutional organization of policy formulation

The prospect of joining the EU in 2004 forced Polish policy-makers to pay more attention to national competitiveness and innovation. Innovation came to the fore of the policy debate in 1999 with the publication of the document Directions of innovation policy until 2002. However, the institutional organization of Poland’s national innovation system still has numerous drawbacks. At present, there seem to be no coordination mechanisms or joint strategic policy developments between the various government ministries responsible, directly or indirectly, for innovation policy. Indeed, responsibility for developing and promoting various aspects of innovation policy in Poland remains dispersed between the Ministry of Scientifi c Research and Information Technology (MNiI), the Ministry of Economy and Labour (MGiP), and the Ministry of National Education and Sport (MENiS) (Figure 3.1).

Ministry of Scientifi c Research and Information Technology (MNiI)

Formerly called the State Committee for Scientifi c Research (KBN), MNiI was created in April 2003. KBN was a governmental body set up in 1991 as the supreme authority on state policy in the areas of science and technology.

The main tasks of the Ministry are to:

• develop the state’s science policy, including proposals for legal instruments to be issued by the parliament as well as actions to be initiated by the government;


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• provide direction for scientifi c research and development, particularly important for science, culture, social development and the national economy, and conclude and carry out inter-governmental agreements on scientifi c and technical cooperation;

• distribute funds allocated each year for R&D, then supervise and evaluate the progress of the sponsored R&D (European Trend Chart, 2005: 8–11; MSRIT, n.d.).

Figure 3.1 Institutional organization of Poland’s national innovation system

COUNCIL OF MINISTERS

Science Advisory Board

MNi I MGiP MENiS

ARP

Patent officePARP

Polish Academy of Science

Sectoral R&D institutes

Sectoral R&D institutes

Department of Innovation

Universities R&D institutes

Department ofStrategy and Science

Development

Source: European Trend Chart on Innovation (2005: 7), and information from Ministry of Scientifi c Research and Information Technology and Ministry of Economy and Labour websites (www.mnii.gov.pl, www.mgip.gov.pl).

MNiI consists of 14 departments. The formulation and implementation of innovation policy is dispersed between several of the Ministry’s departments. However, the Department of Strategy and Science Development plays a primary role in this matter.

Within MNiI’s organizational structure, there is also an advisory body to the minister – the Science Advisory Board, created in October


http://www.mnii.gov.pl

http://www.mgip.gov.pl

128


2004. The board is responsible for performing tasks that were formerly the responsibility of the State Committee for Scientifi c Research. These tasks mainly concern the distribution of funds among institutions and research teams and monitoring their spending (MSRIT, n.d.). The Science Advisory Board has the authority to supervise and assess the R&D activities performed by various organizations.

Ministry of Economy and Labour (MGiP)

MGiP consists of 32 departments (MGiP, n.d.). The Department of Economic Competitiveness, Department of Industrial Policy, Department of Entrepreneurship Development, and Department of Regional Policy deal with interrelated innovation policy issues. The Department of Innovation, on the other hand, focuses solely on innovation and knowledge-based society (KBS) policy as well as systemic and ownership changes in R&D units.

The Department of Innovation was created in March 2003 as a result of the internal reorganization of the former Ministry of Economy. Formerly the Department of Economic Strategy (Innovation Division), this body played a major role in formulating innovation strategies in Poland. Its work led to the adoption of a key document on innovation, Growth of innovativeness of the Polish economy until 2006, by the Council of Ministers on 11 July 2000 (Council of Ministers, 2000a).

The Department of Innovation’s main tasks include:

• creating strategic programmes promoting enhanced economic innovation,

• supporting infrastructure favourable to the uptake of innovation in the framework of the National Development Plan,

• identifying barriers to innovation growth and analysing the effectiveness and effi ciency of instruments supporting innovation development,

• cooperating with regional authorities in the fi eld of innovation policy,

• creating systemic mechanisms to support the commercialization of technology and innovation,

• improving instruments supporting the creation of high-tech companies,


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• cooperating with international and national organizations in the fi eld of innovation stimulation,

• undertaking actions with a view to improving industry–science relations,

• monitoring R&D organizations,• managing the implementation of projects prepared using EU

structural funds and relating to the Department’s activities (MGiP, 2005).

The Department of Innovation unoffi cially plays the role of an intermediary between the departments of different ministries responsible for the formulation of innovation policy.

Ministry of National Education and Sports (MENiS)

MENiS’s role in the national innovation system is limited to providing direction for the development of education policy in Poland. The Ministry is responsible for the development of education and training systems in the country. It sets guidelines as to the thematic content of different courses of studies. The Ministry supervises state and private school institutions and a number of other scientifi c institutions and foundations. All state universities depend directly on the Ministry.

In order to ensure the quality and effi ciency of higher education in Poland, the State Accreditation Committee (PKA) was created within MENiS in 2002. The committee plays an advisory role on the creation of new HEIs and on new courses of studies at existing HEIs, as well as on the evaluation of training quality

Aside from the ministries, four government agencies play an important role in Poland’s national innovation system: the Polish Agency for Enterprise Development (PARP), the Industrial Development Agency (ARP), the Patent Offi ce of the Republic of Poland, and the Polish Academy of Sciences (PAN).

Polish Agency for Enterprise Development (PARP)

PARP is a government agency that reports to the Minister of the Economy and Labour. PARP manages the EU and state budgetary funds intended for enterprise and human resource development, in particular small and medium-sized enterprises.


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PARP is responsible for analysing the SME sector and publishing the results. It has also set up various programmes for SMEs, which can be divided into direct and indirect assistance initiatives as follows:

• Direct assistance: – subsidies for investments – information and advisory services – Bank of Technologies and Products9 – Club of Innovating Enterprises.• Indirect assistance: – fi nancial aid to institutions fi nancing SMEs – regional Financing Institutions (RIFs) – consultation points – support to new and existing technology parks, technology

incubators, and technology transfer centres.

In 1996, PARP set up the National Network of Services for SMEs (KSU). By 2004 this network consisted of over 180 institutions, mainly PARP ‘Consultation Points’, created to offer SMEs high-quality services for their business development (including R&D). Institutions must undergo a special ‘quality control’ accreditation procedure in order to obtain the status of a KSU member institution.

In recent years, the National Network of Innovation (KSI) was created within the KSU network. KSI institutions are meant to provide advisory services in the fi eld of innovation (patent regulations, technology transfer agreements, R&D cooperation agreements, etc.). The idea for the KSI network is based on the EU Framework Programme’s Innovation Relay Centres (IRCs). However, KSI gives support to Polish fi rms wishing to develop domestic technologies; there is no international dimension to the KSI network, since the IRC institutions provide such services (for more information see Section 3.3).

Industrial Development Agency (ARP)

ARP was created as a National Treasury company in 1991. Its main tasks are:

9. Database similar to Innovation Relay Centres’ database but offers data mainly from the Polish R&D sector.


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• providing support for restructuring Polish fi rms and their adjustment to the requirements of international competitiveness, and

• creating initiatives aimed at the development of economic infrastructure.

ARP provides support mainly for large enterprises in stagnant sectors or for companies considered important from the point of view of the labour market. It also assists in implementing innovation and technology transfer policy. The role of ARP in Poland’s national innovation system has grown, and the agency is now responsible for establishing industrial parks and supporting technology incubators that favour the creation of innovative enterprises.

At the beginning of 2002, the Industrial Development Agency supported by the Ministry of Economy established Innovation Centre FIRE, which was modelled on the Inno-Centre in Quebec (Canada). The FIRE Foundation began operations in late 2002 and is located in Warsaw.

The Patent Offi ce of the Republic of Poland

The Patent Offi ce of Poland was created in 1918. Its role in the national innovation system is quite obvious – it is the sole offi ce that grants patents for inventions, utility models, and designs and registering of trademarks and semiconductor topographies.

The main tasks of the offi ce include:

• granting legal protection for industrial property,• gathering and distributing documentation and patent literature, and• co-creating and popularizing of the rules of industrial property

protection.

The Patent Offi ce of Poland has also set up a network of Regional Centres of Patent Information. These centres are located in the country’s biggest cities, usually in higher education technical institutions such as polytechnics.

Polish Academy of Sciences (PAN)

PAN was established in 1951. At that time, it played the role later fulfi lled by the Ministry of Science or KBN. In 1997 the Academy obtained


132


the status of ‘state scientifi c institution’. This means that the role of the PAN in the Polish national economic system changed from that of a ministerial-type institution to that of a purely scientifi c organization, conducting nationally renowned basic research.

At present, the Academy consists of 81 organizational units – 58 institutes and 23 research centres – carrying out mainly basic research. Altogether, it employs 6,934 people (4,646 of whom are directly involved in research activity).

The PAN is divided into seven sections corresponding to different scientifi c fi elds:

1. social sciences,2. biological sciences,3. mathematical, physical and chemical sciences,4. technical sciences,5. agricultural, forestry and veterinary sciences,6. medical sciences, and7. earth sciences and mining sciences.

Under the existing legislation, there is no coordination mechanism related to innovation policy in Poland. However, the Department of Innovation at MGiP seeks to play the role of unoffi cial coordinator, recognizing it as necessary. Depending on the actual situation and particular needs, meetings on innovation matters are organized at the level of under-secretaries of state. On average such meetings take place once every two months. Thus, the nature of innovation policy-making coordination in Poland can be characterized as ‘ad hoc’ (European Trend Chart, 2005: 5).

The R&D sector in Poland

The R&D sector in Poland includes branch R&D units (JBRs), the Polish Academy of Science’s scientifi c units, public and non-public higher education institutions that perform R&D activity, development units and other R&D institutions.

Branch R&D units (JBRs) are science-research institutes, central laboratories, and R&D centres. They are mostly state institutions distinguished in a legal, organizational, economic, and fi nancial sense,


133


and conduct R&D for use in different fi elds of economic and social life. Their tasks include:

• conducting R&D activities and implementing their results in practice;

• disseminating R&D results;• undertaking a range of activities with a view to improving methods

of conducting R&D;• conducting supplementary activities, in particular in the fi elds

of training, scientifi c, technical and economic information, inventiveness, as well as industrial and intellectual property protection;

• conducting analysis and forming opinions related to the state and development of different fi elds of science and technology, as well as making proposals for using world achievements in science and technology in the national economy.

The term ‘development units’ refers to economic entities conducting R&D in addition to their basic line of business. They conduct mainly development activities aimed at using already-existing knowledge obtained through basic and applied research, or as a result of a practical experiment, with the intention to create new or improved existing materials, devices, products, processes, systems, or services. Most development units are industrial enterprises that possess their own R&D departments as well as agricultural and veterinary institutions, farm and experimental stations, science-technical centres, and so on.

The term ‘other’ relates to hospitals conducting R&D in addition to their basic line of activity. These are entities other than medical academy clinics and hospitals, and clinics of the Centre of Post-Diploma Medical Education, which are classifi ed as HEIs, and hospitals holding a status of science-research institutes, classifi ed as R&D units.

Branch research and development units (JBRs) and higher education institutions constitute the main body of the R&D sector in Poland. In 2003, they spent 67.8 per cent of all expenditure on R&D (GUS, 2003: 26).

The enterprise sector is the biggest R&D spender in the country. However, over 50 per cent of expenditure in this sector in 2001 came


134


from the privatized R&D units, which formed only about a quarter of the sector (Table 3.8). The government and higher education sectors were responsible for over 60 per cent of all R&D spending in the country – indicating that state funding of R&D prevails. Private higher education institutions were responsible for less than 2 per cent of total R&D expenditure in the sector.

Table 3.8 Structure of Poland’s R&D sector (2001)10

Sector Number of units*

Structure %

R&D spending%

Employment %

Enterprise sector 600 65.22% 38.40% 65.60% Branch R&D units** 146 24.33% 54.40% 5.10% Enterprises with R&D departments 453 75.50% 45.60% 94.90%Government sector 184 20.00% 31.80% 7.96% PAN science institutions 81 44.02% 39.80% 19.53% Branch R&D units** 86 46.74% 57.90% 61.28% Other 17 9.24% 2.30% 19.19%Higher education sector 121 13.15% 29.70% 26.40% State HEIs 103 85.12% 98.10% 95.07% Private HEIs 18 14.88% 1.90% 4.93%Private non-profi t institutions 15 1.63% 0.20% 0.20%Total 920 100.00% 100.00% 100.00%

Source: Rejn, 2003: 127 and the authors’ own calculations based on the source.* Units surveyed by Polish Central Statistical Offi ce using PNT-01 and PNT-01/s statistical report forms.** Branch R&D units in the private sector are privatized branch R&D units, which formerly belonged to the government sector. the privatization process of branch R&D units in Poland has not yet been fi nished.

Figure 3.2 presents an overview of the structure of R&D expenditure in the Polish R&D sector. In total, R&D institutions in Poland are mainly involved in basic and applied research (64.5 per cent of all expenditure). This leaves only 35.5 per cent of expenditure for experimental development.

Higher education institutions and the Polish Academy of Sciences units are the most involved in basic research. PAN units spend almost

10. The table contains only data for units surveyed by GUS (each year GUS asks organizations to fi ll in and send to them statistical forms available for download from the GUS website – in the case of this table, data from forms PNT-01 and PNT-01/s were used. NT in the code of the questionnaire means science and technology, for example the CIS questionnaire in Poland is coded as ‘PNT-02’.


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90 per cent of their R&D expenditure on basic research and HEIs almost 60 per cent. The ‘other’ institutions are mainly involved in applied research, as is evident from their R&D expenditure (56 per cent).

Figure 3.2 Structure of R&D expenditure in the Polish R&D sector (2003)

Source: Author’s elaboration based on GUS, 2004: 41.

Greater involvement in experimental development is evident on the part of the central laboratories (67.4 per cent), R&D units (69.4 per cent), and above all development units (86.6 per cent). However, their share in the total number of institutions in the Polish R&D sector is too small to infl uence the overall structure of R&D spending in the country.

National-level R&D expenditure in Poland

National R&D spending in Poland is relatively low and is declining as a percentage of GDP. Although in both nominal and real values a rise in R&D spending was observed in the 1990s, the year 2000 marked the beginning of a period of stagnation.

The most objective measure of R&D spending is its ratio to GDP. A low and decreasing level of this indicator is regarded as the main feature of the Polish innovation system for the period 1994–2003. Although the National Development Plan for the years 2004–2006 postulates achievement of GERD/GDP ratio of 1.5 per cent in 2006, in 2003 this

88.7%

19.2%

20.7%

2.7%

3.2%10.1%

59.9%

38.8%

8.4%

36.5%

37.4%

29.9%

27.4%

56.0%

10.8%

25.5%

25.7%

44.3%

41.9%

67.4%

69.3%

33.8%

86.5%

14.6%

35.5%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

PAN science units

R&D units (JBRs) total

Science-research institutes

Central laboratories

R&D centres

Other

Development units

Higher education institutions

Total R&D institutions

Basicresearch

Appliedresearch

Development

2.9%

2.6%


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indicator remained at the level of 0.56 per cent – thus constituting only 30 per cent of the EU average. It is therefore questionable whether Poland will be able to compete on the increasingly technologically advanced European market.

Table 3.9 Basic characteristics of R&D spending in Poland

R&D spending

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003% change

1994–2003

in millions of PLN (current prices)

1,721.0 2,132.8 2,761.4 3,361.0 4,005.1 4,590.5 4,795.9 4,86 4,522.3 4,558.3 165%

in millions of PLN(constant prices)

1,323.5 1,625.2 2,220.2 2,897.2 3,596.6 4,214.1 4,402.6 4,649.1 4,472.6 4,503.6 240%

as % of GDP 0.82 0.69 0.71 0.71 0.68 0.7 0.66 0.64 0.58 0.56 -32%

per inhabitant in PLN (current prices)

44.7 55.3 71.5 87.0 109.4 118.8 124.1 126 120 119 167%

per inhabitant in PLN (constant prices)

29.9 42.1 57.5 75.0 98.2 109.1 113.9 120.6 118.7 117.6 294%

Source: Central Statistical Offi ce (GUS), 2000–2004.

It should also be stressed that there are permanent and signifi cant regional disparities in R&D potential and activities. The ratio between the voivodships (provinces) with the highest (Mazowieckie) and the lowest (Swietokrzyskie) indicators amounts to 18/1 in GERD/GDP ratio and 30/1 in GERD per inhabitant. Besides, traditionally more than 60 per cent of spending on GERD is concentrated in three Polish voivodships (Mazowieckie, in Warsaw; Malopolskie, in Krakow; and Wielkopolskie, in Poznan), while funding in some other voivodships is negligible (Swietokrzyskie, Podlaskie, Opolskie, Lubuskie, Warminsko-Mazurskie, and Zachodniopomorskie). The regional differentiation of R&D fi nancing is attributed to the regional differentiation of the GDP in Poland.

As a member of the EU, Poland has committed itself to accomplishing the principles of the Lisbon Strategy. The most important


137


of these concerns the structure of R&D fi nancial sources, which is another serious drawback of the Polish innovation system. The trends observed in this respect are just the opposite of what the Lisbon Strategy intends and of what is typical in the most developed economies. For the whole of the last decade, the state budget has been the main funding source for R&D activities in Poland. It accounts for more than 60 per cent of GERD, which is nearly twice the average for the EU countries. Moreover, the share of the state budget has grown, while the enterprise share in R&D fi nancing has decreased.

Figure 3.3 Trends in R&D spending in Poland


There are several reasons for this situation. On the one hand, enterprises in Poland either do not consider R&D an important factor in their development or do not have enough fi nancial resources to conduct R&D activities. Surveys demonstrate that over 50 per cent of Polish SMEs seek their competitive advantage in lower production costs, with only around 2 per cent aiming to compete on the grounds of innovation and technological advancement. In recent years, however, stable growth of expenditure on innovation in industry has been observed.

Innovation activity in Polish enterprises consists mainly of investment in machinery and equipment, while direct R&D spending accounts only for 11 per cent of all expenditure on innovation.

0.82

0.69 0.71 0.71

0.58 0.56

0

1,000

2,000

3,000

4,000

5,000

6,000 0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

01994 1995 1996 1997 1998 1999 2000 2001 2002 2003

R&D spendingin PLN million (current prices)

R&D spendingin PLN million(constant prices)

R&D spendingas % of GDP

0.68 0.7

0.640.66


138


Several surveys carried out in Poland proved that fi nding a reliable partner is a serious barrier for enterprises willing to cooperate in the fi eld of R&D. In some cases, the research conducted in Polish scientifi c institutions does not meet the expectations of the business sector.

Besides these negative tendencies, it is worth noting that although foreign R&D funding is rather low and covers only 4.6 per cent of total R&D spending, it has increased rapidly since the late 1990s.

Figure 3.4 Structure of R&D funding by source (%)


Human resource development and technology diffusion in Poland

State and private higher education institutions are responsible for ensuring human resource development in Poland (Section 3.3). HEIs educate future scientists, engineers, technologists, and other specialists in bachelor’s or master’s degree courses, but also offer a range of lifelong learning possibilities in the form of postgraduate education (post-diploma courses and training).

In addition to HEIs, there are a considerable number of special institutions in Poland that carry out a range of activities in human resource development. Generically known as training and counselling centres, they are identifi ed under different names such as ‘centres for entrepreneurship support’, ‘centres for business support’, ‘entrepreneurship clubs’, and ‘consultation’ and ‘counselling’ points.

100%90%80%70%60%50%40%30%20%10%0%

1996

Other

International organizations

Polish Academy of Scienceand other R&D institutions

Enterprises

State budget

1997 1998 1999 2000 2001 2002 2003

28.8

57.8 61.6 59 58.5 63.4 64.8 61.1 62.7

27.3 29.7 30.6 24.5 24.3 32.7 23.5


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At the end of 2004, 280 such centres were identifi ed in Poland – twice as many as in 2000. Among the range of services they offer, one can fi nd training and counselling for SMEs (29.6 per cent of working time); help for the unemployed and those seeking employment (23.9 per cent); help for newly founded enterprises (22 per cent); assistance in the creation of new enterprises (9.3 per cent); counselling and training for large enterprises (3.9 per cent); and other services (11.3 per cent) (SOOIPP, 2004: 29–31).

The concept of technology diffusion is relatively new in Poland. The oldest and best-known network of institutions dealing with technology transfer and knowledge diffusion is the National Network of Services for SMEs (KSU). This network was established in 1996 and is coordinated by the Polish Agency for Enterprise Development. The main aim of this network is to provide general support to enterprises’ activities. The network already has over 200 accredited institutions, which provide support to SMEs from all of the regions in Poland. These institutions cooperate voluntarily and provide advisory, training, information, and fi nancial services for small and medium-sized enterprises. They are independent and have different organizational forms. Among them, one can fi nd agencies for regional and local development, business support centres, chambers of commerce, branch R&D units, credit guarantee funds, loan funds, and business schools (PARP, 2004: 10).

Poland’s 25 Regional Centres of Patent Information (RCPIs) constitute another network that supports technology transfer. The Polish Patent Offi ce disseminates patent information and promotes intellectual property rights in industry through this network. The Centres are located mainly at technical universities (polytechnics) throughout the country as well as in branch R&D units or companies. They offer patent information resources in printed and electronic versions as well as access to databases of the Polish Patent Offi ce, European Patent Offi ce, and others. In addition, there are 29 Technology Transfer Centres in Poland, several of which are located in Polish universities. They are usually created as part of existing institutions like universities and polytechnics, or funded as separate entities by HEIs in cooperation with regional or local authorities and agencies. Their main objective is technology and knowledge transfer from science to the business sector as well as consultancy services, especially for SMEs. They undertake different


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initiatives including Innovation Relay Centres and technology parks, or take part in other related activities.

One recent example of the Technology Transfer Centres’ activities is the Technology Transfer and SME Innovativeness Support Network (STIM, Sieć Transferu Technologii i Wspierania Innowacyjności MŚP) co-fi nanced by the European Regional Development Fund. The project’s aim is to build a national network that provides access to information and consultancy services regarding technology transfer.

The IRC network exists in Poland, as in the other EU countries. In April 2004, the structure of Poland’s IRCs changed. Currently, four regional consortia host 15 regional institutions. The regional consortia are organized as follows: IRC North-East Poland (covering Lubelskie, Podlaskie, and Warminsko-Mazurskie voivodships); IRC Central Poland (covering Lodzkie, Mazowieckie, Pomorskie, and Kujawsko-Pomorskie voivodships); IRC South Poland (covering Malopolskie, Podkarpackie, Slaskie, and Swietokrzyskie voivodships); and IRC West Poland (covering Dolnoslaskie, Lubuskie, Opolskie, Wielkopolskie, and Zachodniopomorskie voivodships). The IRC network aims at promoting innovation and technological exchange between different European organizations.

Another network, which has operated in Poland since 1994, consists of 12 Euro Info Centres. One of the main objectives of these centres is the integration of small and medium-sized enterprises in the Common European Market (CEM). Euro Info Centres undertake a range of activities, such as organizing informational workshops about European programmes open to Polish fi rms, or about principles and standards in the CEM and individual foreign markets. They are affi liated with different organizations supporting economic development, such as the regional development agencies and chambers of commerce. They are co-fi nanced by the European Commission and affi liated institutions.

Moreover, 50 regional and branch contact points (RCPs and BCPs) of the EU Framework Programme network coordinated by the National Contact Point (NCP) operate in Poland. The role of this network is to encourage Polish scientifi c teams and individual researchers to participate in the EU Framework Programmes. The Regional and Branch Contact Points are located mainly at universities, in scientifi c units of


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the Polish Academy of Sciences or in branch R&D units. However, they sometimes they work as independent institutions or foundations. The scope of operation of RCPs and BCPs also includes managing part of the EU structural funds related to the R&D sector. Some of the contact points specialize in services for enterprises interested in taking part in European research programmes. The NCP is fi nanced by the Ministry of Scientifi c Research and Information Technology, as are, partly, the RCP and BCPs.

In 1999, the European Commission announced a call for proposals (Specifi c International Scientifi c Cooperation Activities – INCO) for Centres of Excellence from the Candidate Countries. Nine Polish projects were accepted and fi nanced by the Fifth EU Framework Programme. As a result of subsequent calls for proposals for Centres of Excellence, further Centres of Excellence were created: fi ve were established in 1999 (PHARE SCI-TECH II project), 138 Centres of Competence and Excellence were set up in 2001 (NAS-2 project), and fi ve more Centres of Competence and Excellence were founded in 2002 (IST-2002-8.1.6 project).

Centres of Excellence are organizational structures involved in scientifi c research and the development of world-class technology with measurable scientifi c effects. Centres of Excellence do not set out to create new research institutions. Rather, they seek to function as a sort of laboratory that cooperates actively with industry and other research users. Centres of Excellence implement projects in fundamental research, as well as search for specifi c innovative applications. The main objectives of the Centres of Excellence created in Poland are to:

• increase the role of science and research as a factor enhancing the competitiveness of Polish economy and society,

• establish stronger links between research and practices stimulating the development of innovative solutions,

• strengthen cooperation between scientifi c institutions sharing similar research objectives, and

• improve the national innovation system through creating strong research and implementation structures and promoting outstanding Polish research institutions nationally and internationally (NCP, n.d.).


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The most recent initiative in the field of technology transfer in Poland took place in 2002. Poland’s National Network of Services lacked efficiency and focus on innovation. In order to meet entrepreneurs’ requirements for a transparent and common organizational structure for pro-innovation activities, the National Network of Innovation (Krajowa Siec Innowacji/KSI) was created. Individuals affiliated with universities or regional Centres of Technology Transfer developed this initiative. It is worth noting that the KSI structure was based on the model of Innovation Relay Centres. The network’s operating model has been established; its first members have been chosen (Gulda, 2005) by a team of experts selected to designate a group of institutions that provide services in the field of innovation within the framework of the broader National Network of Services. The main task of the members of the KSI network is to support the creation of conditions for new technology transfer as well as commercialization and realization of innovative undertakings in SMEs.

3.4 Policies and programmes for the stimulation of academia–industry relations in Poland

History and objectives of academia–industry partnership support programmes

Prior to the 1990s, Poland was characterized by a centralized planning approach to the stimulation of academia–industry partnerships. A great majority of instruments intended to encourage research for industrial implementation therefore took the form of centralized actions and programmes.

Great Research and Development Programmes (GRDP) were the main instruments of science, technology, and production integration in Poland from the beginning of the 1970s until the middle of the 1980s. As the previous system of ‘subject’ division of funds for science and technology proved to be insuffi cient, the GRDP shifted the focus to an ‘object’ approach. Financial resources were granted on demand to project coordinating units for the full range of their activities, from research to building the prototype of a machine or technological process. Financial aid was to be granted to all units participating in research


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activities regardless of their organizational status and type of activity (Glikman, 1991: 228–229). In reality, however, the ‘subject’ approach was not eliminated, since the structure of the funded research coincided with the structure of research units.

In the 1980s, the Polish R&D funding system underwent some changes. In 1984, two central administrative bodies were created: the Committee for Science and Technical Progress and the Science-Technology Progress Council. These bodies were to play the role of coordinators in the fi eld of centrally funded research. The Committee used various methods of encouraging science and technology development in the country, such as initiation of research compliant with the long-term strategy of socio-economic development, coordination of research activities and their fi nancing, and implementation and dissemination of research results. The Central Programmes of Basic Research and Central Programmes of Research and Development included these research initiatives (Jasinski, 1997: 156–157). Government commissions intended to fi nance activities crucial to economic development, or those related to research activities in view of further scientifi c development, were other important incentives to scientifi c and technological progress in Poland (Glikman, 1991: 204–206).

Financial resources for achieving the above initiatives came from the Central Fund for Science and Technology Development. This Fund was divided into two parts: the Central Fund for Research and Development and the Central Fund for Implementation Aid, the smaller of the two. The Central Fund for Research and Development was used to fi nance large research programmes of varying nature (Glikman, 1991: 204–206). It was created from two sources: payments from Polish enterprises and the central budget. From 1986-1990, enterprises were required to donate a small percentage of their sales earnings to the fund (1 per cent in 1987 to 1.3 per cent in 1990) (Glikman, 1991: 208–210).

The main reason behind creating the above-mentioned incentives was to foster industrial implementation. They were meant to improve the fl ow of R&D fi ndings to industry (Jasinski, 1997: 157). However, a great majority of funds were granted to R&D units outside enterprises, which meant that the infl uence of the market mechanism was largely disregarded. In other words, the Polish Government was forcing the technology/supply model of the innovation process, with a major role


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being granted to technology suppliers and little infl uence being attributed to the demand side recognized by the entrepreneurs.

Due to the transition to a market economy, most of Poland’s centralized policies concerning regulation of innovation activities had to evolve. Several changes to the formulation of the innovation support framework were introduced at the beginning of the 1990s. A signifi cant share of government initiatives for R&D activities and technical progress, including implementation activities, was discarded and no new incentives were introduced. This resulted in equal access to potential government support for both the public and private sectors. R&D units ceased to act as government units as the prospects of their reorganization and privatization became feasible. The Central Fund for Science and Technology Development was liquidated and enterprises were no longer obligated to make donations to the fund. Since then, fi nancial resources for R&D activities have come from a separate part of the government’s central budget (Jasinski, 1997: 159–160). Responsibility for the formulation and coordination of Poland’s science and technology policy was assigned to the State Committee for Scientifi c Research (KBN), created in 1991. Since then, the KBN has granted state fi nancial support to research projects. Priority has been given to projects related to new solutions with potential for implementation. However, the new system has not overcome the problems of the previous one – the ‘subject’ approach remains predominant and research institutions have submitted most of the projects. The result has been a continuing predominance of basic and applied research fi nancing rather than development activities and implementation.

Because of a lack of effective measures, cooperation between the academic and business environments in Poland is rather scarce. It should be noted that HEIs in Poland today, in particular polytechnics (technical universities), usually create special administrative units responsible for initiating and maintaining contact with the business sector, especially with industry. However, practice shows contact is usually initiated by business rather than by the scientifi c sector. For the most part, individual entrepreneurs sign cooperation agreements with individual researchers. The administrative units responsible for partnerships with the business sector mentioned above are left out of the process (Olechnicka, 2004). The main reason for this is an overgrown bureaucracy in public HEIs


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and the lack of specifi c legal regulations concerning the commercial use of state-funded research results. This is expected to change following the implementation of the recently published Law on Forms of Support of Innovative Activity.

Although wide debate about the scarcity of academia–industry partnerships in Poland was only initiated recently, it has already given policy-makers an impulse to start designing special programmes that could help to remedy the problem.

Policy-makers acknowledge that some Polish R&D institutions are characterized by a relatively high technological potential and employ excellent specialists in many areas. The main problem is that the new technological solutions developed by R&D institutions rarely fi nd applications in industry. This may be a result of lack of information available to enterprises about activities in the R&D institutions and academia, and hence lack of diffusion of new technologies to the industrial sector. The most important objective of academia–industry partnership support programmes in Poland is therefore to fi rst encourage cooperation between the sectors by eliminating the most obvious obstacles, such as the lack of information-sharing practices.

Programmes to create incentives for joint academia–industry R&D activities

The need to increase joint academia–industry R&D activities was emphasized in a number of policy documents, among which are the Plan of pro-growth actions from 2003–2004 (entrepreneurship – development – work II) and Directions of science, science-technology and innovation state policy through 2020.

Until very recently, the former State Committee for Scientifi c Research (now Ministry of Scientifi c Research and Information Technology) was the only state institution with the fi nancial and organizational power to award funding to different projects submitted by Polish scientists and entrepreneurs.

The state supports scientists and research institutions through the funding of so-called ‘research projects’. Projects are chosen via a competitive process. Each project is reviewed by a group of specialists


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in a given area, taking into account potential future implementation of its results (possibly in the business sector). Financial resources are transferred to research institutions (individual scientists use the resources transferred to their home institution) through an agreement. Business sector participation is not necessary to obtain funding, although it is not discouraged. The funded institution or scientists are obliged to submit periodic and fi nal reports to the Ministry, which are then evaluated.

The state supports entrepreneurs through the funding of so-called ‘targeted projects’.11 Projects eligible for funding must support innovation processes in enterprises. As in the case of research projects, targeted projects are chosen for funding through a competitive process and fi nancial resources transferred based on an agreement. State funding can represent up to 70 per cent for SMEs, while other enterprises can obtain up to 50 per cent of the total research costs of a given project. These fi nancial resources can be used to conduct joint research with HEIs or simply to buy their services in a given research area. Research results are to be implemented at the entrepreneur’s cost. Table 3.10 presents the number and value of targeted projects in the years 1994–2001.

Table 3.10 ‘Targeted’ research projects fi nanced by the former State Committee for Scientifi c Research (KBN) in the years 1994–2001

Targeted research projects fi nanced by the KBN 1994 1995 1996 1997 1998 1999 2000 2001

Number of projects 796 732 772 756 777 834 1,292 1,239Value of the projects (in mln PLN)

147.3 149.7 191.5 196.9 181.6 203.6 230.8 232.3

Source: Sectoral Operational Programme – Growth of Enterprises Competitiveness, Ministry of Economy and Labour, Warsaw 2004.

Currently, Polish scientists and entrepreneurs have an alternative source of funding for R&D and innovation projects. This is the Sectoral Operational Programme – Growth of Enterprises Competitiveness 2004–2006 (SOP-GCE). Projects submitted within the framework of this programme are partly fi nanced by EU structural funds (mainly the European Regional Development Fund).

11. The original Polish term is projekty celowe.


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The fi rst priority of the SOP-GCE is ‘developing entrepreneurship and increasing innovation by strengthening business support institutions’. Within this fi rst goal, a special measure related to joint academia–industry research activities was designed to strengthen cooperation between the R&D sector and the economy (measure 1.4). The types of projects that can be fi nanced under this measure include:

• R&D projects: industrial and pre-competitive research conducted by enterprises or groups of enterprises and/or in cooperation with science-research institutes (sub-measure 1.4.1);

• investment projects related to the development, modernization, and equipment of specialist laboratories offering specialist services to enterprises (sub-measure 1.4.2);

• investment projects related to the development, modernization and equipment of specialist laboratories in Centres of Advanced Technologies and Centres of Excellence functioning in priority areas for the development of the Polish economy (sub-measure 1.4.3);

• research projects conducted by Centres of Advanced Technologies (sub-measure 1.4.4); and

• research projects in the area of monitoring and forecasting scientifi c and technological development (sub-measure 1.4.5).

The SOP-GCE operates on a national level. The European Regional Development Fund and Poland’s central budget provide the fi nancial backing for this programme and its selected projects.

Programmes to support the development of innovative enterprises

A number of experts have underlined the the Polish business sector’s weak fi nancial situation. Improving access to various external sources of enterprise fi nancing has come to the forefront of government actions in recent years.

Currently, the Polish Agency for Enterprise Development (PARP) plays a key role in supporting loans and credit guarantees in the country. The agency makes grants to select non-profi t organizations intended to raise the value of the capital funds they manage. It has also set up a network of institutions called regional fi nancing institutions (RFIs).


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PARP also took an active part in developing a government loan and credit guarantee system for SMEs in 2002–2004, called Capital for Entrepreneurs (Council of Ministers, 2002a). The programme was approved in August 2002; the former Ministry of Economy, Labour and Social Policy approved the specifi c ‘Rules of functioning of loans and credit guarantees’ in 2003.

The programme’s main objective was to create an integrated and effective system of regional and local fi nancial institutions (providing loans and credit guarantees) that would improve access to external sources of fi nancing for entrepreneurs. A network of credit guarantee institutions was based at the Bank of Domestic Economy and a network of loans at PARP.

If all goes as planned, this programme should create a network of strong regional institutions active in each voivodship; as a result, an estimated 100 local institutions will become operational, offering the following fi nancial instruments:

• loans and credit guarantees for entrepreneurs starting up an economic activity, including graduates, and

• loans for SMEs to create more jobs and bring more graduates into the workforce.

Most of the funding for the creation and maintenance of the loans and credit guarantee programme was to become available after Poland joined the EU in 2004. The SOP-GCE includes measures related to fi nancial support to enterprises.

Measure 1.2 of the SOP-GCE is devoted to ‘improving accessibility of external fi nancing for enterprises’ investments’. Within the framework of this measure, the following actions are planned:

• further capitalization of micro-loan funds (sub-measure 1.2.1),• further capitalization of credit guarantee funds (sub-measure 1.2.2), • support for the creation of seed capital funds (sub-measure 1.2.3).

As part of SOP-GCE’s second priority, ‘Direct support for enterprises’, two measures are designed to improve Polish enterprises’ fi nancial situation as well as their innovative qualities.


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Measure 2.2, ‘Support for product and technological competitiveness of enterprises’, aims at improving enterprise competitiveness by supporting new investments that lead to fundamental changes in products and/or production processes. This measure also promotes Polish enterprises on an international scale.

Measure 2.3, ‘Growth of SME competitiveness via investment’, aims at increasing Polish SMEs’ competitiveness by fi nancing projects to allow enterprises to:

• modernize their facilities;• undertake mutual investments;• purchase R&D results and/or industrial property rights;• implement and commercialize technologies and innovative

products;• implement and use electronic technologies;• implement and use information technologies in management

processes; and• adjust technologies and products to fi t EU requirements, particularly

setting standards and enforcing hygiene and safety norms.

The above measures will be fi nanced by a direct grant of up to 50 per cent of the total investment cost depending on the region of the country. Resources designated for support come from the European Regional Development Fund and central budget.

In recent years, the Ministry of Labour and Economics has also been implementing a pilot project called Academic Entrepreneurship Incubators. A number of organizations operating at HEIs, selected through a competitive process, will receive grants to create an incubator. As the grants are small, at around 3,000 euros per organization, other sources of funding must be found, usually in the form of commercial activities plus additional sources of state funding.

Support for creating innovative enterprises can be also understood as helping them to fi nd sources of and acquire innovative technologies. The creation of technology transfer centres in Poland was described in Section 3.3. Such centres can be a result of projects submitted to regional authorities and fi nanced within the framework of the Integrated Operational Programme of Regional Development 2004–2006


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(IOPRD): ‘Regional innovation strategies and transfer of knowledge’ (measure 2.6). The projects can be submitted by HEIs and business support organizations, or by consortia of the above.

Programmes to create a climate and structures for innovation

Creating a climate for innovation is understood in Polish policy documents as the promotion of innovation within society and the facilitation of innovation support structures for enterprises.

We can identify two government programmes related to the creation of a climate conducive to innovation activity – these are the above-mentioned IOPRD and SOP-GCE.

Support provided under IOPRD’s measure 2.6, ‘Regional innovation strategies and transfer of knowledge’, is related to creating a climate conducive to innovation, and includes:

• developing and adapting regional innovation strategies (RIS);• setting up a network for innovation transfer between the R&D

sector, enterprises, and other players at the regional and local levels; and

• developing an information and communication system (including data collection and databases);

• collecting and diffusing information on training and education activities in support of transfer of innovations.

IOPRD is coordinated at the regional level, although the Ministry of Economy’s Department of Implementation of Regional Development Programmes manages the programme. Funding for the programme comes from the European Regional Development Fund, European Social Fund and Poland’s central budget. The Ministry of Economy is in charge of monitoring IOPRD.

The IOPRD measures are of a more general nature than those of the SOP-GCE. The latter’s fi rst priority, termed ‘Development of entrepreneurship and growth of innovation through strengthening of business environment institutions’, aims to achieve the following in order to create a climate for innovation:


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• stimulate entrepreneurship and innovative activity by providing access to high-quality business support institution services;

• prepare modern infrastructure for conducting economic activity; • expand public use of on-line services, in terms of accessibility and

range of utilization.

Proposals for the accomplishment of the above objectives are found in measures 1.3 and 1.4 of SOP-GCE’s fi rst priority. The main objective of SOP-GCE’s second priority (measure 2.1), entitled ‘Growth of competitiveness of small and medium-sized enterprises through advisory services’, is to facilitate access to specialist advisory services for SMEs.

Also of note are Regional Innovation Strategy projects, implemented in different regions of the country and intended to create a climate conducive to innovation, particularly by reaching a consensus between different regional actors. Three Polish regions took part in the Fifth Framework Programme project on Regional Innovation Strategies in New Acceding Countries and one in the Sixth Framework Programme. Twelve Polish regions took part in a Ministry of Scientifi c Research and Information Technology project launched in 2002. The results of the projects will be used as a basis for further developing Poland’s national innovation strategy.

3.5 Administrative frameworks of policies and programmes for the stimulation of academia–industry relations in Poland

Legal frameworks of the innovation system

The Polish national innovation system functions within the framework of a number of legal texts concerning the higher education, R&D, and business sectors. Regulations also include acts concerning the protection of databases, intellectual and industrial property, and legislation related to public support for enterprises. Polish law is being systematically adjusted to EU legislation.

The Law of 8 October 2004 on Rules of Science Financing (Journal of Laws, 2004) defi nes new legal instruments related to scientifi c fi nancing and organization. These are:


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• the domestic framework programme, which will serve as an instrument for Polish science and science-technology policy and specify scientifi c research and experimental development priorities;

• scientifi c consortia – groups of organizational units carrying out joint research or investments;

• scientifi c networks – groups of scientifi c units cooperating with the aim of developing their scientifi c specialities;

• programmes and endeavours aimed to help young scientists, establish information and information technology infrastructure for science, encourage cooperation between science and the economy, foster international science and technology cooperation, reorganize science units, and so on;

• the modifi cation of science units’ evaluation procedures;• development projects for SMEs allowing enterprises to use the

results of their R&D; • targeted projects for entrepreneurs – encompassing applied

research, experimental development, industrial R&D investment and implementation work prior to commercialization;

• the decentralization of the applications qualifi cation system.

The activities of branch R&D units, an important part of the Polish R&D sector, are regulated by the Law of 25 July 1985 on Branch Research and Development Units (Journal of Laws, 1985). This legislation regulates the creation, liquidation, and transformation of branch R&D units, their organization and their functioning, the object of their activities, as well as their fi nancial management. The law also states how a branch R&D unit can be transformed into a privately owned entity.

The Law of 30 June 2000 on Industrial Property (Journal of Laws, 2001) regulates inventions, utility designs, industrial designs, trademarks, geographic signs, and the topography of integrated systems. It sets the terms upon which projects are accepted and rewarded as well as the tasks and organization of the Republic of Poland’s Patent Offi ce.

The Law of 11 April 2001 on Patent Representatives was passed in 2001 (Journal of Laws, 2001). This legislation enabled the creation of a patent representative profession. The responsibilities of a patent


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representative include providing support services on industrial property protection matters to individuals, enterprises, and other organizations.

The Law of 20 March 2002 on Financial Support for Innovation (Journal of Laws, 2002) defi nes the principles and forms of granting fi nancial support to entrepreneurs making new investments or creating new jobs as a result of their investments. Local governments can also apply for fi nancial support related to the creation and modernization of technical infrastructure as long as their plans are directly related to entrepreneurs’ investments.

Laws related to intellectual and industrial property rights in Poland are consistent with EU legislation.

Polish policy-makers see the need to stimulate academia–industry partnerships as very important. In order to facilitate the creation of cooperation mechanisms, a new innovation law is being prepared that takes into account the specifi c characteristics of both the higher education and business sectors in Poland.

The Law of 29 July 2005 on Forms of Innovative Activity Support (Journal of Laws, 2005) includes changes to previous laws, including some concerning higher education institutions. It is proposed to add clauses to both the Law on Higher Vocational Education Schools and the Law on Higher Education allowing institutions to cooperate with the economic environment, in particular by delivering the results of their R&D activities to entrepreneurs, with or without payment. In order to make the most of HEIs’ intellectual and technological potential, they should be permitted to create academic entrepreneurship incubators and technology transfer centres.

Venture capital in Poland

Since 1990, a few dozen fi nancial institutions described as venture capital (VC) organizations operate in Poland. Polish law does not directly regulate VC funds. This means that, in order to conduct this sort of activity, institutions can use a number of different organizational forms allowed by Polish legislation (Garrett-Jones, 2004: 5–12).

At the beginning of 2001, 28 leading closed investment funds with the basic characteristics of VC funds were active in Poland. The


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total capital of all VC funds operating in Poland at the beginning of 2001 amounted to over US$2,000 million. This constitutes growth of over 110 per cent since 1997: a result of the emergence of new funds and growth in the capital value of those already existing on the Polish market. The smallest VC funds are those with 100 per cent Polish capital, and the largest those with 100 per cent foreign capital. In 2001, Polish capital constituted only 7 per cent of the whole value of VC funds in the country. However, the share increased systematically during the 1990s (in 1995, it represented only 0.76 per cent) (SOOIPP, 2002: 192–193).

Figure 3.5 presents an overview of sources of capital for VC funds in Poland in 2001.

Figure 3.5 Sources of venture capital in Poland (2001)

Source: SOOIPP, 2002: 193.

The interests of venture capitalists in Poland are mainly in the so-called ‘new economy’. Investment possibilities related to the Internet, e-commerce, telecommunications, and information technologies enterprises are the most sought-after.

Many analysts of the Polish VC market indicate that VC in this country is not ‘high-risk capital’. Among Polish VC investments, the later stages of enterprise activity predominate. In 2001, most of the VC organizations operating in Poland indicated having made an investment at the second (26 per cent) or later (23 per cent) stage of enterprise

Pension funds 11%

International organizations 10%

Enterprises 9%

Other VC 7% Other 1%Banks 40%

Government agencies 13%

Insuranceinstitutions 9%


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activity. Seed-stage fi nancing was undertaken by only by 7 per cent and start-up fi nancing by 11 per cent of VC institutions (SOOIPP, 2002: 194).

Administrative instruments encouraging applied research with industry

Polish policy-makers recognize the need to encourage joint research initiatives between academia and industry. In Section 3.4, existing programmes related to the stimulation of such activities were presented. Aside from those programmes, there are currently no other administrative instruments that particularly encourage applied research in conjunction with industry in Poland.

‘Targeted projects’ of the former State Committee for Scientifi c Research and current Ministry of Scientifi c Research and Information Technology, as well as projects submitted within the framework of the EU structural funds (operational programmes), are intended to change the focus of research organizations from basic to applied research. This could be conducive to cooperation between academia and industry.

The law on support of innovative activity currently being developed by the Department of Innovation in the Ministry of Economy and Labour is intended to encourage joint applied research with industry. The project aims to encourage cooperation between various science and research units (including universities and other HEIs) and industry. This would be achieved by awarding the special status of ‘research and development centre’ to enterprises that fulfi l certain requirements and by allowing HEIs to create technology transfer centres within their structures. It would also regulate sales and the transferral of R&D results.

3.6 Assessment of the effectiveness of academia–industry partnership incentives and support instruments

Evaluation of the effectiveness of national policies, programmes, incentives, and frameworks for the stimulation of academia–industry partnerships

The great majority of policy documents related to academia–industry partnerships were created only recently. It is therefore not yet possible to evaluate their effectiveness in terms of goal achievement and contribution to economic development.


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Our analysis indicates that the scarcity of academia–industry partnerships in Poland is owing to a complex set of reasons. It should be considered from three different perspectives: that of the R&D sector, that of the industrial sector, and that of the innovation support structure.

The Polish R&D sector is characterized by low state R&D expenditure and inadequate state funding structures for R&D. The real needs of the economy regarding R&D and related research priorities are not clearly identifi ed, nor is academia suffi ciently involved in conducting research that would benefi t the economy.

Although Polish R&D institutions are characterized by having relatively high technological potential and employ excellent specialists in many areas, they may not be considered worthy partners by enterprises because of their primary involvement in basic rather than in applied research. Another problem seems to be that new technological solutions developed by R&D institutions rarely fi nd applications in industry because knowledge-sharing practices between the two sectors are non-existent.

Moreover, the higher education sector seems to produce staff who are well-trained but lacking in entrepreneurship skills. In addition, no adequate incentives to start one’s own business based on one’s technological know-how exist. Thus the scientifi c staff of R&D institutions have little interest in commercializing R&D results. As a result, the creation of spin-off fi rms is a very rare phenomenon in Poland.

It is also very characteristic of Poland that in addition to excellent R&D institutions with international renown, there are many ‘peripheral’ science institutions that focus mainly on training and educational activities, but do not perform any scientifi c research.

Polish enterprises do not consider R&D an important factor in their development. Surveys demonstrate that over 50 per cent of Polish SMEs seek their competitive advantage in lower production costs; only around 2 per cent aim to compete on the grounds of innovation and technological advancement. It is true that stable growth in industry’s innovation expenditure has been observed over recent years, but expenses on fi xed capital predominate in the present structure of expenditure among other investment costs.


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Enterprises in Poland do not ordinarily have suffi cient fi nancial resources to conduct their own in-house R&D activities: the high costs of innovation development and implementation, which exceed the existing fi nancial capacity of most enterprises, are the main obstacle to their innovative activity. The generally low level of R&D expenditure in Polish enterprises shows that they are rather passive in the fi eld of innovative activity and do not generate new technological knowledge for their development.

The low level of domestic R&D fi nancing may lead to a widening of the technological gap between Poland and more developed economies. The existence of the technological gap becomes more evident when we take into account the considerable interest Polish enterprises have in purchasing foreign technologies. Innovation in the Polish economy is becoming increasingly dependent on imported patents, licences, know-how, and technologies. However, inward technology transfer can also be a very important source of technological advancement and in time could help improve the Polish economy.

In addition to the problems related directly to the R&D and enterprise sectors, a network of linkages between the two is also missing. The quality of business support services in Poland leaves much to be desired, and the country’s public online information services infrastructure needs further development.

The analysis of the technology transfer structure in Poland has shown its several serious disadvantages (Gulda, 2005). In spite of an apparent multitude of technology transfer support organizations, only a limited number take part in the activities supporting innovation in Poland. Each institution attempts to be involved in several technology transfer structures. This has some positive outcomes, due to the concentration of information and knowledge and their natural fl ows between networks. But at the same time, such concentration limits the scope of a particular network’s infl uence. In addition, the networking character of the structures is doubtful because of the infrequent use of information technology within networks and little contact with enterprises.

Surveys conducted by PARP and research conducted under the framework of the RIS projects in Poland have proved that Polish technology transfer networks are hardly recognized by the business


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sector. Nor is there coordination or spontaneous cooperation between technology transfer networks.

However, some progress in creating measures conducive to academia–industry partnerships and innovation is evident. This may help to turn the situation around. The proposed incentives and structures are based on the experiences of the EU-15 countries and also take into account the special characteristics of the Polish economic system.

Poland has introduced several measures intended to increase R&D fi nancing and reorganize the R&D sector. Until recently, the former State Committee for Scientifi c Research, now the Ministry of Scientifi c Research and Information Technology, has been the most important source of state funding of research and development activities in Polish R&D institutions. However, a decade of the Committee’s activities has not caused a signifi cant change in the domestic R&D structure – a large share of R&D expenditure continue to go to basic research. Currently, there is a debate about changing the evaluation criteria of projects submitted for funding; institutions with low research potential may not be eligible for state funding in the future. Some of these ideas will be included in the new law on fi nancing scientifi c activities.

Those drafting the law on fi nancing scientifi c activities intend to support strong research institutions for the most part. However, there is a need for cooperation between such institutions and weaker ones. This may be the only means for institutions with less research potential to develop. Currently, there are no instruments or incentives related to supporting cooperation between stronger and weaker domestic research centres.

Assuring industry’s greater involvement in R&D activities seems to be the best way to increase the value of expenditure on applied research and experimental development. Measures included in the SOP-GEC and IOPRD are designed to do just that. The projects fi nanced by these programmes can be submitted by enterprises and the funding received used to simply buy R&D results, or to conduct joint research with R&D institutions.

A new law supporting innovative activity is in the works. This project includes a proposal to create a Technological Credit Fund using the Domestic Economy Bank’s fi nancial resources. Technological


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credit would be given for investments related to the development or implementation of new technologies. It would be allocated according to market rules and could be remitted if the enterprise fulfi lled certain requirements stated in the law. The project also aims to encourage cooperation between various scientifi c and research institutions (including universities and other HEIs) and industry. This would be achieved by awarding a special status of ‘Research and Development Centre’ to enterprises that fulfi l certain requirements (a new category of high-tech fi rms) and by allowing HEIs to create technology transfer centres within their structures, regulating R&D handover and sales. Entrepreneurs often complain about the long bureaucratic procedures involved in technology and knowledge transfer from higher education institutions. The new innovation law will reduce this problem.

The rules of establishing public–private partnerships have not yet been established in the Polish legal system. Cooperation agreements between mostly public R&D institutions and private enterprises are not easy to conclude without regulations. The Ministry of Economy and Labour is drafting a law on public–private partnerships to remedy this.

The lack of linkages between academia and industry sectors and the absence of institutional instruments enforcing their cooperation on innovation are the weakest points of the Polish national innovation system. Moreover, the networking character of the structures is doubtful because of the infrequent use of information technology within networks and little contact with enterprises.

A few measures have been taken in order to improve the situation. The National Network of Innovation (KSI) is a good example. It was created with the aim of consolidating institutions dealing with technology transfer in Poland. This initiative is only in its beginning stages. Researchers and ministerial offi cers in Poland have high hopes about the future development of this network.

Although the tendency leans towards innovation network consolidation, the remaining initiatives related to the establishment of innovation and technology transfer centres in Poland are dispersed between the SOP-GCE and IOPRD programmes. Nevertheless, experience shows that the same institutions submit most of the projects related to technology transfer. Merging technology transfer initiatives


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within one institution could have both positive and negative outcomes. The technology transfer system in any given region or country can only benefi t from the involvement of strong and well-known organizations in multiple projects.

Additionally, although attention is increasingly focused on regional development, disparities remain between Polish voivodships in relation to R&D fi nancing and the business support infrastructure. The differences between regions are based on their different levels of economic development. Total negligence of peripheral regions will result in their further recession. The policy measures described in this study are not designed to level out those disparities. Policy-makers have been directed by the principle of effi ciency rather than equity.

Strengths and weaknesses of organizational modes and management practices

The biggest strength of Polish organizational modes and management practices in academia–industry partnerships is the ability to create various support networks, which have been described in this case study.

PARP is the strong point in the organization of the Polish national innovation system. It consolidates and is responsible for most of the initiatives directed towards SME support in the country, including the creation of Regional Financing Institutions, the National Network of Services, and National Network of Innovation, as well as contact points (‘one-stop-shop’ information centres for enterprises). It also manages measures related to SME support included in the SOP-GCE programme.

The principal shortcoming of the Polish innovation system is the lack of coordination mechanisms for different initiatives. This also concerns cooperation between the academic and industrial sectors. The substantial disadvantage of this is that existing structures operate separately, without any coordination.

Currently, several operational programmes are being implemented in the country, partly fi nanced by EU structural funds. A number of ministries and government agencies are responsible for their implementation. This means that responsibilities relating to carrying out the current National Development Plan and National Strategy for Regional Development are dispersed between different entities at the


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national and regional levels. Moreover, programmes and measures concerning academia–industry partnerships are managed by different organizations. This may have a negative impact on coordination and monitoring of the activities at both the national and regional levels. The dispersion of responsibilities for government programmes also results in ineffi cient dissemination of information concerning them.

Another drawback of policy management is the inadequate monitoring of policy implementation. Prior to joining the EU, government programmes were hardly ever monitored in Poland. The monitoring process was limited to preparation of ex-post reports. The situation has now changed, mainly due to the requirements of the European Commission regarding policy evaluation.

A majority of Poland’s policy documents and programmes were developed with the guidance of the European Commission, taking into account experiences and good practices from other EU countries. This can certainly be considered a positive contribution that greatly improves the effectiveness of these policies and programmes.

It should also be noted that many of the new initiatives related to Polish R&D are a result of debates between the government and the academic sector in response to the requirements of enterprises. There is some willingness on the part of the higher education and R&D sectors to participate in joint initiatives with enterprises. Poland is experiencing the emergence of a milieu that tends towards support for innovation.

The main negative factors affecting innovation in Poland are internal to the Polish economy. They are related to the specifi c characteristics of the parties concerned – R&D institutions and enterprises. The lack of coordination mechanisms between the various ministries and agencies responsible for programme management, namely the absence of information-sharing practices, is another important obstacle to innovation development. There are also problems with programme implementation, in particular concerning the complicated procedures surrounding project application and reporting. The most important internal factors negatively affecting R&D-related policy implementation in Poland include the country’s low R&D potential, high level of bureaucracy, and low involvement in applied research and experimental development.


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IV. ACADEMIA–INDUSTRY–GOVERNMENTINTERACTION IN THE REPUBLIC OF KOREA

Sunyang Chung

4.1 Introduction

There have been many studies on national innovation systems. This concept aims at enhancing technological and economic capabilities through close collaboration among innovation actors within a national innovation system. According to the defi nition of a ‘national innovation system’ that will be discussed below, it is not only the composition and network of innovation actors that are important, but also their collaboration and interaction.

Most studies have concentrated on the composition and institutional fabric of innovation systems, so that they have focused on innovation actors themselves. However, research and development (R&D) collaboration among innovation actor groups is essential for any competent national innovation system. In this chapter, we will discuss the collaboration of innovation actors within the Republic of Korea’s national innovation system, with a particular focus on the perspectives of industrial companies.

South Korean companies have attained remarkable technological capabilities since the country’s industrialization (Song, 1990; Chung and Lay, 1997). Within a couple of decades, these companies have produced technologies that rank among the world’s best, including code division multiple access (CDMA), automobiles, semiconductors, and nuclear power plants. Today, South Korean companies are making even greater efforts to enhance their technological capabilities. These are based on their in-house R&D activities and their active collaboration with universities and government-sponsored research institutes.

It was only at the beginning of the 1980s that South Korean companies started in-house R&D activities and hence interaction with other innovation actors. Before this, the country’s public research institutes (PRIs), which began to be established at the end of the


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1960s, had played a leading role in the national innovation system since industrialization. At the beginning of the 1980s, however, leading companies started to pour their efforts into R&D activities, in particular by establishing their own research institutes. The government gave companies many incentives to establish these institutes. The presence of research institutes in Korean companies therefore increased dramatically in the 1980s and 1990s. As a result, in September 2004 over 10,000 private research institutes existed in the Republic of Korea. Initially, companies focused on their in-house R&D activities instead of on collaboration with other innovation actors, such as universities and PRIs. Since the end of the 1990s, companies have emphasized R&D collaborations with other innovation actors. Their prior accumulation of R&D capabilities played an important role here. Nowadays, such collaboration between industrial companies and universities as well as PRIs is a highly debated issue in the Republic of Korea.

This study aims to examine government action to promote collaboration among industrial companies, universities, and government research institutes, and identify good practices. In addition, we explore the actual partnerships among these innovation actor groups. We discuss the strategies, current status, barriers to, and future perspectives of companies’ R&D collaborations. We use the concept of the national innovation system as the framework for our research, as this presupposes close interaction among innovation actors, that is, industrial companies, universities, and PRIs. Based on our analysis, we identify some important strategic implications that apply to companies on the whole.

Section 4.1 introduces this study and explains its background. Section 4.2 deals with the historical development of the South Korean innovation system. We discuss not only the role of government, but also the division of labour among innovation actors. In addition, we address the impact of the economic recession in the late 1990s on Korea’s national innovation system. In Section 4.3, we discuss major policy instruments for activating interaction among innovation actors. Based on this analysis, we will categorize policy programmes and evaluate their contribution to R&D collaboration in the South Korean innovation system. Finally, Section 4.4 draws conclusions for this chapter.


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Academia–industry–government interaction in the Republic of Korea

4.2 Development of the Republic of Korea’s national innovation system

The purpose of this section is to analyse the South Korean Government’s efforts to enhance innovation capabilities since the beginning of the country’s industrialization. Special attention is paid to how the country overcame International Monetary Fund (IMF) jurisdiction in the late 1990s and the role innovation played in this process. The concept of the national innovation system serves as the framework for our research here. We analyse the national innovation system according to its major innovation actor groups: government, academia, the public research sector, and industry. As only a few research studies have been conducted on the Republic of Korea’s national innovation system (e.g. Kim, 1993; Chung, 1996; 2003b; Chung and Lay, 1997), this section will be a useful tool for understanding its dynamism.

This section briefl y introduces the South Korean economy as a whole and then focuses specifi cally on the national innovation system. The role of government, which is a major actor in this system, in developing innovation capabilities since the beginning of the country’s industrialization is also analysed. Indeed, the government’s strong role in enhancing innovation capabilities is an important characteristic of the South Korean innovation system (Kim, 1993; Chung, 2003b; Chung and Lay, 1997). We consider how this innovation policy developed in the process of its industrialization. Our analysis then tackles the division of labour among actual innovation actor groups, academia, the public research sector, and industry, using statistics on national R&D resources. The role of innovation actors in overcoming the IMF jurisdiction in the late 1990s, and in particular, the role of the government in overcoming the economic crisis within a very short period, is discussed in detail, as well as the impact of the economic crisis during the IMF jurisdiction on the country’s national innovation system. Finally, a sub-conclusion summarizes the characteristics of the national innovation system and highlights some meaningful implications for other countries.

The national economy

The Republic of Korea has developed remarkably since the early 1960s. Many key products in international markets, such as CDMA, semiconductors, automobiles, and steel are made in the country. The


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country’s success is a result of its strong capabilities in technological innovation. These capabilities began to be developed at the end of the 1960s and have been reinforced since the 1980s. They have been transformed into new products and services that are competitive in international markets.

Table 4.1 shows the major indicators of the country’s economy since its industrialization. First, population has increased signifi cantly: from 25,012 million people in 1960 to 45,985 million people in 2000. This represents an 84 per cent increase over four decades. However, we can observe that the increase rate has decreased dramatically since the beginning of the 1990s. Today, the country’s low birth rate is a topic of concern.

Table 4.1 Major economic indicators in the Republic of Korea

1960 1970 1980 1990 2000 2004Population (000s) 25,012 32,241 38,124 42,869 45,985 48,082

GDP (US$ billion) 2 8 62 253 512 680Growth rate of GDP (%) 2.2 17.2 21.8 20.6 8.5 4.6GDP per capita (US$) 80 248 1,632 5,900 11,134 14,143Trade balance (US$ millions) -65 -597 -4,384 -2,004 11,787 29,382Exports (US$ millions) 32 660 17,214 63,124 172,268 253,845Imports (US$ millions) 97 1,256 21,598 65,127 160,481 224,463

Source: National Statistical Offi ce [each year].

Second, GDP increased dramatically, from US$2 billion12 in 1960 to US$512 billion in 2000. This means that total GDP was multiplied by a factor of 256 over four decades. Third, the GDP growth rate has been always surprising in the country’s history of industrialization. The year 1960 showed an annual growth rate of only 2.2 per cent. However, during the 1970s, 1980s, and 1990s annual growth rate was always in the double digits. Table 4.1 confi rms these exceptional rates: 17.2 per cent in 1979, 21.8 per cent in 1980, and 20.6 per cent in 1990. However, rates fell during the 1990s, especially following the economic crisis of the late 1990s. The year 2000 showed a growth rate of only 8.5 per cent.

12. In this case study the term billion means a million million.


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Fourth, as a result of rapid economic development, per capita GDP in the Republic of Korea also increased dramatically, from US$80 in 1960 to US$11,134 in 2000. This means that it was multiplied by a factor of 140. Fifth, the country suffered from trade defi cits until the early 1990s, as it had required many resources for its industrialization. Since its economy switched into high-tech oriented structures in the 1990s, however, the country has shown a positive trade balance. For example, the year 2000 showed a trade balance of US$11,787 million. This confi rms the competitiveness of the South Korean economy in international markets.

Finally, the country is producing even stronger economic results today. At the end of 2004, GDP stood at US$680 billion, having shown a 32.8 per cent growth rate in the four years between 2000 and 2004. However, the annual growth rate of GDP declined from 8.5 per cent in 2000 to 4.6 per cent in 2004. This indicates that the country should identify future growth potential for further development. GDP per capita in 2004 was US$14,143, which amounts to 27 per cent growth in the four years between 2000 and 2004. This is a big increase, due in part to exchange rate fl uctuations. The trade surplus in 2004 was US$29,382 million, representing an increase of 150 per cent between 2000 and 2004. This is because of the strong competitiveness of high-tech products such as semiconductors, consumer electronics, and automobiles.

History of the national innovation system

The government plays an important role in almost every aspect of South Korean society. In this centralized country, the government has increased its efforts to enhance innovation capabilities. It has specifi c innovation policies that could be interesting to other countries. Several methods might be adopted to classify and describe the historical role of the central government in the area of science and technology. This role could be described in terms of changes in the administration of a central government or in terms of decades. Our studies show that many countries have changed policy directions when entering a new decade (Bruder and Dose, 1986; Chung and Lay, 1997).

The government has tended to adopt major new policy programmes with the turn of a new decade. Some studies and reports on the historical


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development of innovation policies, such as Ministry of Science and Technology – MOST (1990), OECD (1996) and Chung and Lay (1997), discuss the government’s role in the country’s development of innovation capabilities in terms of decades. Table 4.2 shows the role played by the government in science, technology, and innovation in terms of decades. The table indicates that the national innovation system has developed signifi cantly since the beginning of South Korea’s economic development, with the government playing an important role in each decade. At fi rst, the government made great efforts to establish a science and technology infrastructure. However, since the beginning of the 1980s, it has tried to promote interaction among innovation actors by implementing national R&D programmes.

Table 4.2 Role of the Republic of Korea’s Government in the national innovation system

Decade Characteristics of innovation policies1960s Beginning of scientifi c education

Beginning of science and technology infrastructure construction1970s Establishment of government-sponsored research institutes

Development of technical, scientifi c, and continuing educationBeginning of industrial R&D

1980s Promotion of key technologies through the National R&D ProgrammeActivation of industrial R&DMass production of highly qualifi ed R&D personnelExpansion of science and technology-related ministries

1990s Expansion of R&D resources and their effi cient utilizationPromotion of academic R&D potentialIntroduction of regional innovation policiesIntroduction of research council system

2000s Enactment of Basic Law of Science and TechnologySelection and concentration on six major technologies: information technology, biotechnology, nanotechnology, environmental technology, space technology, and cultural technologyCoordination of innovation policiesCreation of post of Deputy Prime Minister of Science and TechnologyEstablishment of Science & Technology Innovation Offi ce (STIO)Basic research and welfare technologiesBrain Korea 21 and NURI


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The 1960s

It was not until the early 1960s that national efforts for the promotion of science, technology, and innovation were initiated in line with the First Five-Year Plan for Economic Development, introduced in 1962. Since then, the government has intervened very strongly in the areas of science, technology, and innovation. It has applied a strong technology-push approach in the construction and improvement of the national innovation system. Economic policy in the 1960s was characterized by import substitution and export orientation. At this time, the government was mainly concerned with promoting automobile production (1960), ship building (1967), mechanical engineering (1967), and the electronics industry (1967; see Byun, 1989; Song, 1990). In order to carry out this economic policy effectively, an institutional framework in the area of science and technology was established, including:

• the foundation of the Korea Institute of Science and Technology (KIST) in 1966, which carries out R&D activities, especially in the areas of technology mentioned above;

• the passing of the Science and Technology Promotion Act in 1967; • the establishment of MOST in 1967, which has the task of

formulating and implementing science and technology policy.

At the same time, national universities attempted to produce as many engineers as possible. Indeed, there was a great shortage of qualifi ed engineers, indispensable for the development of the economy. The Republic of Korea’s national innovation system concentrated on the digestion and imitation of imported technologies from more advanced countries. There were no concrete science and technology policy measures and programmes in the system. Most technological and innovation needs were covered by KIST, which was the only research institute in the country.

The 1970s

In the 1970s, the South Korean Government placed the main emphasis of its industrial policy on the establishment and expansion of heavy, chemical, and export-oriented industries (Byun, 1989; Song, 1990). These industries were technology-oriented and needed a certain level of domestic technological and innovation capability.


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With a view to meeting the needs of these industries, the government founded several corresponding government-sponsored research institutes, such as the Korea Institute of Machinery and Materials (KIMM), Korea Research Institute of Chemical Technology (KRICT), and Electronics and Telecommunication Research Institute (ETRI). Together with KIST, these government-sponsored research institutes represent the foundations of the national innovation system.

During this period, the major emphasis of innovation policy shifted from the simple imitation of imported technologies to their complex adoption and the domestic development of simple, less complex technologies. Creative imitation started in this period (Kim, 1993). The government implemented a series of strong policies for producing as many researchers and engineers as possible, as these strategic industries needed them. Some policy measures were initiated to further train the engineers. A number of big industrial enterprises, especially those in the industries mentioned above, began to carry out their own R&D activities.

The 1980s

A very strong increase in industrial R&D activities within the national innovation system characterized the 1980s. Using several policy instruments, the government motivated industrial enterprises to establish their own R&D institutes. The number of private research institutes rose dramatically, from 53 in 1981 to 966 in 1990 (Korea Industrial Technology Association). In line with this strong increase of industrial R&D capabilities, the government tried to shift the industrial structure away from traditional branches and towards high technology areas.

In 1982, the government initiated its fi rst big project in the areas of science, technology, and innovation: the National R&D Programme. This programme aimed to develop not only high technologies, but also major technologies (MOST, 1987). In this programme, the key industrial technologies that companies could not deal with alone were developed through joint projects, especially between companies and government-sponsored research institutes. As a result of strong R&D efforts in the public and private sectors during this period, the Republic of Korea was able to attain a certain level of innovation capability to compete


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with more advanced countries in some high-technology areas such as semiconductors (Science and Technology Policy Institute – STEPI, 1991).

Since the late 1980s, several ministries, including the Ministries of Commerce, Industry and Energy (MOCIE), the Environment, and Information and Telecommunications have become concerned with science, technology, and innovation. In 1987, MOCIE initiated the Industrial Base Technology Development Program. This was the fi rst time that science and technology-related ministries had started such a programme, with the exception of MOST. Following MOCIE, other ministries began to initiate their own programmes, thus enhancing innovation capabilities in many industrial sectors. However, the problem of resource duplication arose in this period, as these ministries competed very strongly with each other to collect more innovation resources.

The 1990s

Despite the greatly increased importance of industry, the South Korean Government intervened more actively in the 1990s than before in the areas of science, technology, and innovation. Based on some successes over the previous decade, it recognized the importance of science, technology, and innovation in economic development. The government therefore tried to step up national R&D expenditure, with the result that in 1991 the share of national R&D expenditure in the GDP exceeded 2 per cent for the fi rst time in the country’s history (MOST, each year).

Based on the strong increase in industrial R&D capabilities in the 1990s, companies took over major areas of R&D activities that had previously been performed by government-sponsored institutes. As a result, there was frequent reorganization, merging, and disorganization of PRIs during this decade. Criticism of the role of PRIs rose during this period (Chung, 2001a; 2002b; 2003a; Kim et al., 2001; Song et al., 2001). In March 1999, the government therefore introduced a new public research system modelled on Germany’s Gesellschaft system, the Research Council.

During this period, the government promoted R&D and the innovation capabilities of the country’s universities very strongly. Indeed, this had been the weakest point of the country’s innovation system up to


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this time (OECD, 1996; Chung, 1996; Chung and Lay, 1997). In order to strengthen academic R&D capabilities, the government initiated the Excellent Research Center (ERC) programme for the most advanced university research centres in 1990. This programme consists of Scientifi c Research Centers in the area of basic science and Engineering Research Centers in the fi eld of engineering and applied research. When a centre in a university is accepted as an ERC, it receives generous funding for a duration of ten years. As there was a hierarchy in the level of research capabilities in South Korean universities, a few universities dominated the ERCs. Moreover, most of these were based in Seoul. The government therefore initiated the Regional Research Center Programme in 1995 in order to strengthen the R&D and innovation capabilities of universities in other regions. As of 2001, 25 Scientifi c Research Centers, 34 Engineering Research Centers and 45 Regional Research Centers were active nationwide (MOST, 2001). These centres have played an important role in enhancing the R&D capabilities of the country’s universities.

In the middle of the 1990s, a new policy direction rose in the national innovation policy, with the government initiating a regional innovation policy. Indeed, the country had developed in the middle of a capital city – Seoul – and its outskirts. The evolution of politics, the economy, society, and culture was centred on these areas, so that the regional level of industry, science, and technology elsewhere in the country remained very low. The central government had always been a dominant player in innovation policy and yet there was no regional science and technology policy in the Republic of Korea. As late as 1999, the R&D budget of all regional governments represented only 6.8 per cent of the national science and technology budget (MOST, 1999). Research organizations were located in and around Seoul and in Dae-Deock Science Park, about 150 km south of Seoul. More recently, however, regional governments have recognized the importance of science and technology for the economic development of their regions, especially since the inauguration of the Local Government System in March 1995. As of 2000, eight of the 16 regional governments have established an independent organization for promoting technological and innovation capabilities in their regional administrations (Chung,


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2002a; MOST, 1999). We can say that in the 1990s, the Republic of Korea was in the early stages of its regional innovation policy.

The 2000s

As it looked towards the twenty-fi rst century, the Republic of Korea initiated a very ambitious plan to enhance technological and innovation capabilities more systematically. In January 2001, the government enacted a comprehensive law, the Basic Law of Science and Technology. This law aimed at a more systematic promotion of science and technology, and required a Basic Plan of Science and Technology to be formulated and implemented every fi ve years (MOST, 2001). This plan comprises the detailed science and technology plans of all related ministries. Based on the law, the fi rst Basic Plan for Science and Technology was formulated in December 2001. It had a comprehensive goal and implementation strategies for enhancing technological capabilities for the next fi ve years, that is, from 2002 until 2006. According to this plan, the Republic of Korea aimed at becoming one of the top ten countries in the areas of science, technology, and innovation (MOST, 2002). Six areas of technology were selected as essential to the knowledge-based twenty-fi rst century: information technology, biotechnology, nanotechnology, space technology, environmental technology, and cultural technology.

As the major science and technology-related ministries promoted technological innovation and allocated signifi cant sums, it became evident that innovation policy would have to be coordinated between these different government actors. The Presidential Committee on Science and Technology was established in 1999 for this purpose. This new committee was established to improve on the Committee of Science and Technology-Related Ministers, chaired by MOST. As there had been strong competition in innovation policies between ministries, and in particular concerning sector-specifi c ministries, it was impossible to attain effective policy coordination under this old committee. However, much better coordination was anticipated under the new set-up, as the chairman of the committee was the President of the Republic of Korea.

During this period, regional innovation policies became an important priority in national innovation policy, especially those of MOST and MOCIE. Special attention was placed on enhancing region-specifi c technological capabilities that could be transformed into


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a regional comparative advantage. Future-oriented policy goals, such as enhancing quality of life in terms of science, technology, and innovation, were pursued seriously for the fi rst time. The government therefore fully recognized the importance of science, technology, and innovation in the economic and social development of the country.

In December 2004, the government started to reform its science and technology administration structure. The Minister of Science and Technology was promoted to Deputy Prime Minister in order to effectively coordinate the science and technology-related ministries. For this purpose, MOST established a Science & Technology Innovation Offi ce to coordinate policy among ministries. As a result, the Science and Technology Minister is positioned at the highest level within the government administration compared with other countries. It is too early to evaluate the new national administration system. However, we can observe that collaboration between related ministries has improved substantially and that the general public in the country tends to appreciate the topics of science, technology, and innovation.

In addition, the Ministry of Education and Human Resources Development (MOE-HRD) has initiated two important programmes for strengthening universities’ R&D and innovation potential: the Brain Korea 21 (BK21) programme and the New University for Regional Innovation (NURI) programme. The BK21 programme was established in 1999 with the objective of upgrading national universities’ research infrastructure and graduate training levels. Between 1999 and 2005, about 1,168 billion ROK won were invested in major South Korean research-intensive universities as part of the fi rst phase of the programme. BK21 was evaluated as successful in strengthening national universities’ R&D potential (Korea Research Foundation – KRF, 2005). The second phase of the BK21 programme, which aims to raise national graduate school standards to a global level, started in 2005 and will run for seven years. The NURI programme began in 2004 in order to help regional universities to develop their areas of specialty and strength. About 1.4 trillion won is to be invested over fi ve years and currently 109 of the 241 regional universities participate in this programme. These two programmes (BK21 and NURI) are very comprehensive and favour universities’ R&D collaboration with other innovation actors.


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During this period and based on continuous efforts to develop technological capabilities, some South Korean companies, especially big companies in chaebols (corporate groups), have become very competitive in international markets by producing ‘frontier’ products. This is due not only to the fi rms’ relatively good strategic decision-making (Hobday, Rush, and Bessant, 2004) but also to the government’s active support of their technological innovations. Building on effective collaboration between the public and private sectors, national companies have become very competitive in several key industrial sectors, such as semiconductors, mobile phones, and the steel and biotechnology industries.

Division of labour among innovation actors

The national innovation system can also be described in terms of national resources deployed for R&D activities. These refl ect not only the history of the system’s development, but also the division of labour between research producers or ‘innovation actors’. In this section, we will discuss national R&D resources in the Republic of Korea since the beginning of the 1980s. Special focus is placed on the development of the Republic of Korea’s national R&D resources since the middle of the 1990s. We can draw information on national R&D resources from two kinds of statistics: national R&D expenditure and the number of researchers, or R&D human resources. The former can be classifi ed into sources and uses of R&D expenditure. We will also analyse these statistics in depth in order to grasp the dynamism of the national innovation system.

Research and development expenditure

The short history of the national innovation system is refl ected in the following examination of its national R&D resources. Figure 4.1 shows the trends of R&D expenditure and their ratio to GDP. We can observe that the Republic of Korea invested very little in R&D activities until the beginning of the 1980s. During the 1970s, the ratios of R&D expenditure to GDP were less than 0.5 per cent. In 1980, national R&D expenditure amounted to only 0.58 per cent of GDP. At the time, the country had no resources to invest in science and technology, and South Korean society had not yet recognized its importance or that of R&D.


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Figure 4.1 Trend of R&D expenditure in the Republic of Korea and ratio to GDP (in real value)

Source: Ministry of Science and Technology webpage (www. most.go.kr).

However, national R&D expenditure rose dramatically during the 1980s, so that in 1990 about 1.91 per cent of GDP was spent on national R&D activities. This is equivalent to an annual increase rate of 31.2 per cent over this period. In the 1990s, the importance of technological innovation had been widely accepted in South Korean society (Chung, 2001b). Total R&D expenditure in 1995 were 94 billion won, which amounted to 2.5 per cent of the GDP. The country made a strong investment in R&D activities. Indeed, few countries, even more advanced ones, are comparable in this regard to the Republic of Korea.

Until the IMF jurisdiction in the fall of 1997, total R&D expenditure in the 1990s increased dramatically. The years 1995, 1996, and 1997 showed an annual increase rate of over 10 per cent. Indeed, there was a 19.6 per cent increase during 1995. However, in 1998, just after the IMF jurisdiction, there was a decrease of 7 per cent. This was the fi rst time that there was such a decrease in national R&D investment in the history of the country’s science, technology, and innovation development. However, the rate was not severe and was followed by an increase of 5.2 per cent the next year. By 2000, the rate rose to 16.2 per cent, a fi gure comparable to the year prior to IMF jurisdiction. Since this date, the increase rates in total R&D investment have declined, but remain very high compared with more advanced countries.

250,000

200,000

150,000

100,000

50,000

0

3.0

2.5

2.0

1.5

1.0

0.5

0

Total R&D expenditure Ratio of R&D to GDP

1964

140.39

0.42 0.56

0.52

1.87

2.37 2.392.59 2.53 2.64

190,687

173,251161,105

138,485

94,406

33,49911,5522,117427105

1970 1975 1980 1985 1990 1995 2000 2001 2002 2003

won (100 million) %


http://www.most.go.kr

177


This implies that the Republic of Korea has remained largely unaffected by the IMF jurisdiction. As a result, its total national R&D expenditure in 2000 were 138 billion won. The shares of total national R&D expenditure in GDP were 2.39 per cent in 2000 and 2.64 per cent in 2003. Such progress refl ects the country’s important investment in R&D despite the deep economic recession, and in relation to other nations.

When we look at sources of national R&D expenditure, the private sector has played a growing role in fi nancing, particularly since the early 1990s. In light of the globalization of the world economy at this time, South Korean private companies recognized the importance of technological innovations in their business activities and continuously increased their R&D investments. The government also extended its support for private companies’ R&D activities, particularly through national projects. Until the end of the 1970s, national R&D expenditure had been fi nanced predominantly by the public sector. In 1980, about 50 per cent of national R&D expenditure was still publicly fi nanced. However, the role of the public sector diminished signifi cantly in the 1980s as a result of the strong increase in fi nancing by the private sector. The ratio of public to private fi nancing was thus about 15.9 to 84.1 in 1990 (Table 4.3). This implies that the private sector gave more importance to technological innovation than the public sector. In fact, industrial companies established their own R&D institutes and greatly increased their expenditure.

The ratio between R&D fi nancing in the public and private sectors developed from 19:81 in 1995 to 25:75 in 2000 and 2003. In the 1990s, the public sector increased its fi nancing more than the private sector. Private companies, which were more affected than the public sector, could not increase their R&D expenditure because of the recession resulting from the IMF jurisdiction. When we look at trends in R&D expenditure according to sector, the fi nancing of R&D activities by the public sector has always increased. In particular, the government increased annual R&D investment by 41.3 per cent in 1995 and 34.7 per cent in 1996. Even in 1998, it increased R&D investment at a rate of 7.1 per cent. This implies that the public sector in the Republic of Korea recognized the importance of science, technology, and innovation in overcoming the crisis during this period. However, it is safe to say that the public sector


178


was also infl uenced by the IMF jurisdiction. The annual increase rate declined very strongly during the IMF jurisdiction period and did not recover in the years following the jurisdiction (1999 and 2000).

Table 4.3 Sources of the Republic of Korea’s national R&D expenditure (unit: 100 million won)

Total R&D expenditure(increase rate %) Public : Private Share of GDP (%)

1980 2,117 (21.7) 50:50 0.581990 32,105 (18.7) 16:84 1.911995 94,406 (19.6) 19:81 2.371996 108,780 (15.2) 22:78 2.421997 121,858 (12.0) 23:77 2.481998 113,366 (-7.0) 27:73 2.341999 119,218 (5.2) 27:73 2.25

2000 138,485 (16.2) 25:75 2.39

2001 161,105 (16.3) 26:74 2.592002 173,251 (7.5) 26:74 2.532003 190,687 (10.1) 25:75 2.64

Source: Ministry of Science and Technology, Report on the Survey of R&D in S&T [yearly].

The private sector suffered under the IMF jurisdiction. Previously, it had shown annual increase rates of over 10 per cent. However, in 1998 it showed a large decrease of 11.2 per cent. This suggests that private companies signifi cantly reduced their R&D investment as a result of the recession during the IMF jurisdiction period. In 2000, however, the private sector showed a far higher level of growth. This means that having experienced the economic crisis in the late 1990s, companies in the Republic of Korea recognized the importance of R&D activities in order to overcome the recession and enhance their competitive advantage in globalized international markets. Companies implemented very aggressive R&D and innovation strategies after the IMF jurisdiction period.

Considering national R&D expenditure according to the national innovation system’s performing sectors, we can see changes in the division of labour in the national innovation system since the beginning of the 1980s (Table 4.4). Until the end of the 1970s, PRIs carried out


179


almost all R&D activities. At that time there was no industrial R&D infrastructure in the Republic of Korea.

Table 4.4 National R&D expenditure by sector of performance (billion won)

Totalexp.

Public research sector Academia IndustryA B C A B C A B C

1980 212 1,045 6.4 49.4 259 56.6 12.2 813 37.2 38.41990 3,211 5,917 23.9 18.4 2,443 6.6 7.6 23,745 18.8 74.01995 9,441 17,667 15.3 18.7 7,709 26.6 8.2 69,030 20.2 73.11996 10,878 18,956 7.3 17.4 10,188 32.2 9.4 79,636 15.4 73.21997 12,186 20,689 9.1 17.0 12,716 24.8 10.4 88,453 11.1 72.61998 11,337 20,994 1.5 18.5 12,651 -0.5 11.2 79,721 -9.9 70.31999 11,922 19,792 -5.7 16.6 14,314 13.1 12.0 85,112 6.8 71.42000 13,849 20,320 2.7 14.7 15,619 9.1 11.3 102,547 20.5 74.02003 19,069 26,264 2.9 13.8 19,327 7.5 10.1 145,097 11.8 76.1

Source: Ministry of Science and Technology, Report on the Survey of R&D in S&T [yearly].Note: A: Amount; B: Increase rate (%); C: Share (%).

As late as 1980, PRIs were still absorbing 49.4 per cent of national R&D expenditure, while the industry share stood at only 38.4 per cent. However, as in the fi nancing of national R&D resources, the role of the private sector in national R&D activities increased continuously throughout the 1980s. As a result, industry was using 74 per cent of national R&D expenditure in 1990. This confi rms the strong growth of South Korean industry’s R&D capabilities. For example, the number of private industrial research institutes increased from 53 in 1981 to about 1,200 in 1991 (Korea Industrial Technology Association – KOITA). As a result, industry took over the leading position from public research institutes in the national system of innovation. The country’s universities, on the other hand, played a minor role in the national innovation system in the 1980s. Universities used only 12.2 per cent of national R&D expenditure in 1980 and indeed their role diminished during the course of the 1980s. In 1990, the share of universities benefi ting from total R&D expenditure stood at only 7.6 per cent. The share of national R&D expenditure in 1990 was 18.4 per cent for PRIs compared with 7.6 per cent for universities and 74 per cent for industrial companies.


180


During the 1990s, the dynamic of innovation actor groups benefi ting from national R&D expenditure changed. The distribution of R&D expenditure among public institutes, universities, and companies developed from 18.7 per cent compared with 8.2 per cent and 73.1 per cent respectively in 1995, to 14.7 per cent, 11.3 per cent, and 74 per cent respectively in 2000, and fi nally to 13.8 per cent, 10.1 per cent, and 76.1 per cent respectively in 2003. Out of all the R&D actor groups, private companies performed the best; their role did not change during this period. However, they decreased their R&D expenditure in 1998 (-9.9 per cent). Just after the IMF jurisdiction, in 1999, the rate of increase was 6.8 per cent, but it was far smaller than that before the IMF jurisdiction. In the mid-1990s, companies again reached a level of R&D intensity and showed even stronger R&D activities. As a result, the share of private companies in national R&D expenditure in the 2000s grew even further.

Since the beginning of the 1990s, the role of PRIs has diminished. Their portion of national R&D expenditure declined from 18.4 per cent in 1990 to 14.7 per cent in 2000, and 13.8 per cent in 2003. The decline of the public research sector was particularly evident in the second half of the 1990s. In fact, the public research sector underwent a strong structural reform in early 1998, resulting in the reduction of the research potential of PRIs (Chung, 2001a, 2002b). This is confi rmed by the decrease of this sector’s R&D expenditure in 1999 (-5.7 per cent) as well as by its very small growth rate in 1998 (1.5 per cent). Since 2000, the public research sector has showed a very low rate of growth, for example 2.7 per cent in 2000 and 2.9 per cent in 2003. The statistics on the public research sector show that its role declined remarkably in the 1990s and that this trend has continued into the 2000s. Considering the successful role of PRIs in the history of the country’s economic development, enhancing their role in the national innovation system using quantitative and qualitative perspectives is a challenging issue for the Republic of Korea.

By contrast, university R&D activities showed strong growth during the 1990s. As mentioned above, academia had been the weakest area in the national innovation system, especially prior to the 1990s (OECD, 1996; Chung and Lay, 1997). However, universities have increased their R&D potential signifi cantly, especially since


181


the second half of the 1990s. Indeed, the share of their total national R&D expenditure increased from 8.2 per cent in 1995 to 11.3 per cent in 2000. In particular, more than 25 per cent of the annual increase rates took place before the IMF jurisdiction. As a result, academia was able to play a relevant role in the national innovation system from the mid-1990s onward. The impact of the recession on academic research was not so severe, with only a 0.5 per cent rate of decrease in 1998, following the IMF jurisdiction. However, academia showed an annual increase of 13.1 per cent in 1999 and 9.1 per cent in 2000. Nevertheless, universities were infl uenced by the recession to a degree, as their annual increase rates after the recession were far smaller than before the IMF jurisdiction period. Their shares of R&D expenditure in the national innovation system have remained stable at between 10 and 12 per cent in the 2000s.

R&D human resources

The transformation of technological innovation activities in the Republic of Korea can also be analysed in terms of R&D human resources. Table 4.5 shows the trend in the number of researchers forming part of the national innovation system. In 1980, the innovation system was made up of only 18,434 researchers. During the 1980s, the number of researchers rose very rapidly to 70,503 in 1990. This corresponds to an annual increase rate of 14.4 per cent. In particular, the number of highly qualifi ed researchers increased during this period. In 1980, academia was the largest employer of researchers, employing 47 per cent of all researchers. The second largest employer was industry, with 27.9 per cent of all researchers. It should be noted that PRIs employed about 24.9 per cent of all researchers in 1980.

During the 1980s the role of the private sector in national R&D activities increased continuously. This role was not limited to increased fi nancing of national R&D: in 1990, industry became the biggest employer of researchers nationwide, with 54.9 per cent of the total. This was due to the signifi cantly increased number of private research institutes. In fact, the government implemented several policy measures to induce private companies to employ researchers. For example, a researcher with a master’s degree could be exempt from military service if they had been employed in a private research institute for fi ve years.


182


Universities were also very important employers for the country’s researchers during the 1980s, especially for holders of doctoral degrees. Yet their role was diminished during this period, and in 1990, universities employed 30.3 per cent of total researchers in the Republic of Korea. PRIs continued to employ a signifi cant proportion of the Republic of Korea’s researchers, with 14.8 per cent of all researchers in 1990.

Table 4.5 Number of researchers by year

1980 1990 1997 1998 1999 2000 2003Total number of researchers(Increase rate %)(Share %)

18,398(17.3)(100)

70,503(6.5)

(100)

138,438(4.5)

(100)

129,767(-6.3)(100)

134,568(3.7)

(100)

159,973(18.9)(100)

198,171(4.4)

(100)Public institutes(Increase rate %)(Share %)

4,598(8.0)

(24.9)

10,434(2.3)

(14.8)

15,185(-2.2)(11.0)

12,587(-17.1)

(9.7)

13,982(11.1)(10.4)

13,913(-0.5)(8.7)

14,395(2.1)(7.3)

Universities(Increase rate %)(Share %)(Share of Ph.D.s %)

8,659(22.8)(47.0)

n.a.

21,332(2.3)

(30.3)(76.9)

48,588(7.2)

(35.1)(75.4)

51,162(5.3)

(39.4)(78.2)

50,155(-2.0)(37.3)(76.8)

51,727(3.1)

(32.3)(76.2)

59,746(3.7)

(30.1)n.a.

Companies(Increase rate %)(Share %)

5,141(16.7)(27.9)

38,737(10.2)(54.9)

74,665(4.9)

(53.9)

66,018(-11.6)(50.9)

70,431(6.7)

(52.3)

94,333(33.9)(59.0)

124,030(5.1)

(62.7)

Source: Ministry of Science and Technology, Report on the Survey of R&D in S&T [yearly].

During the 1990s, the number of researchers more than doubled. Indeed, it increased by more than 30,000 during the second half of the decade. However, 1998 showed a 6.3 per cent decrease from the previous year. This implies that the IMF jurisdiction had a severe impact on the number of researchers active in the national innovation system. However, the year 2000 showed a very strong increase in researchers, of 18.9 per cent over the previous year. During this period, there were some changes in the employment of researchers by major innovation actor groups in the Republic of Korea. Indeed, their employment by PRIs, universities, and private companies developed from 14.8 per cent compared with 30.3 per cent and 54.9 per cent respectively in 1990, to 8.7 per cent, 32.3 per cent, and 59 per cent respectively in 2000, and fi nally to 7.3 per cent, 30.1 per cent, and 62.7 per cent respectively in 2003. This shows that private companies employed signifi cantly more researchers, while PRIs saw a dramatic decrease in their research staff.


183


Private industry has been the biggest employer of researchers in the national innovation system. In the fi rst half of the 1990s in particular, companies increased the number of researchers they employed. This fi gure increased from 38,737 researchers in 1990 to 94,333 in 2000, and 124,030 in 2003. However, in the second half of the 1990s the nation’s companies were not as aggressive in employing researchers because of the recession at the time. In 1998 specifi cally, the year following the IMF jurisdiction, there was a remarkable decrease in researchers of 11.6 per cent. Around the end of the 1990s, however, companies recruited researchers very aggressively in an attempt to overcome the recession. In particular, the year 2000 showed a 33.9 per cent annual increase in the rate of employment of researchers. As a result, in 2003, 62.7 per cent of all researchers were employed by industry. This means that companies recognized the importance of science, technology, and innovation in overcoming the recession and enhancing their competitiveness. In line with the increase in R&D investment, companies increased their number of well-qualifi ed researchers to a remarkable scale.

In contrast, PRIs decreased the number of researchers they employed in the 1990s, particularly in 1995, 1997, and 1998. During the same period, other sectors, such as academia and industry, increased the numbers of researchers they employed (other than during the IMF jurisdiction period). In particular, 1998 shows a decrease of 2,598 researchers at public research institutes, representing about 17 per cent of the total fi gure for this sector. We can ascribe two reasons to this. First, the South Korean Government had demanded a strong and radical structural transformation of the public research sector at the time. Many researchers were forced to leave PRIs (Chung, 2001a; 2002b; 2003a). Second, there was a strong increase in start-ups in the country, with many well-qualifi ed scientists and engineers leaving institutes to start their own ventures. In 1999, however, there was a strong increase (11.1 per cent) of researchers in this sector, followed by a small decrease in the year 2000. The year 2003 showed a 2.2 per cent increase in the number of researchers. From this, we can conclude that the public research sector underwent a strong transformation process during the IMF jurisdiction.

Finally, universities remained important employers for researchers in the 1990s. Academia increased its numbers of researchers steadily.


184


There was a small decrease in the second half of the 1990s: from 7.2 per cent in 1997 to 5.3 per cent in 1998. But the year 1999 showed a 2 per cent decrease rate, which shows that the increase in start-up companies took human resources away from the academic sector. In the 2000s, the nation’s academia has shown a small increase in the number of researchers it employs. Academia has always been the biggest employer for researchers with Ph.D.s, providing posts for over 75 per cent of these highly qualifi ed researchers and far outnumbering other actor groups. Considering that academia benefi ted from slightly over 10 per cent of total national R&D expenditure in the second half of the 1990s, one can infer that the country’s universities employ too many researchers, and in particular too many of those with doctoral degrees. It would therefore be desirable for academia to reduce the number of well-qualifi ed researchers it employs. In addition, more R&D funding should be made available to academia. In this sense, the government should prepare to take relevant measures to ease the fl ow of researchers from academia to industry in order to strengthen the national innovation system.

Overcoming the economic crisis of the late 1990s

The International Monetary Fund jurisdiction and the Republic of Korea

It is interesting to consider more systematically whether and to what extent the economic crisis during the IMF jurisdiction infl uenced the South Korean national innovation system. Just after the IMF jurisdiction, many experts expected the country’s economic crisis to last for a long period, as its main cause was a structural problem in the country’s economic system. However, the country overcame the crisis within a far shorter timeframe than expected and regained its economic vitality by the turn of the century. This may be because the innovation potential of the national innovation system continued to grow despite the recession.

In the late 1990s, East Asian countries underwent an economic crisis. Many studies on the reasons for this crisis were carried out and experts argue that the basic reasons were increased domestic debts and a lack of liquidity. Hong and Ryoo (1999), for instance, argue that the economic crisis was foreseeable because of several symptoms: a


185


decrease in economic growth, deterioration of trade, lack of liquidity, and so on. They argue that the economic crisis of the East Asian countries in the late 1990s was mainly caused by a lack of liquidity instead of a deterioration of the real economy. According to their study, South Korea had the makings of a serious economic crisis owing to a deterioration in trade and a lack of liquidity. The country therefore had two sets of problems: one concerning economic fundamentals and the other concerning liquidity.

The economic crisis was partly the result of the weakness of the country’s economic fundamentals. Most importantly, the country had structural weaknesses in its innovation capabilities. Booz Allen & Hamilton (1997) argue that the country was confronted with a nutcracker-like situation, meaning that it was very fragile. It had to compete not only with countries such as the USA, Japan and European countries in the area of high-tech products, but also with less developed countries like China and other East Asian countries in the area of low labour-oriented low-tech products. South Korea therefore needed to strengthen its innovation capabilities to a large degree. However, the national innovation system could not produce high value-added products because of its lack of innovation capabilities. As discussed above, the academic sector was the weakest point of the national innovation system. The public research sector had not found the right strategic direction, and most industrial enterprises, in addition to big enterprises, could not develop suffi cient innovation capabilities.

Figure 4.2 summarizes the trend of the national innovation system’s capabilities since the middle of the 1990s. It depicts both national R&D expenditure and the number of researchers according to major innovation actor groups. It shows the trend between R&D expenditure and the number of researchers before and after the IMF jurisdiction. The unexpected economic crisis at the end of the 1990s did not have a severe impact on the national innovation system. The recession under the IMF jurisdiction, however, did infl uence innovation activities in the country, especially those of industrial enterprises. In the year 1998, just after the IMF jurisdiction, total national R&D investment recorded a decrease of 7 per cent compared with the previous year for the fi rst time in the history of the national innovation system. There was also a 6.3 per cent decrease in the number of researchers in the same year.


186


Figure 4.2 Impact of IMF jurisdiction on the Republic of Korea’s national innovation system

Of the major actor groups, industry was the most severely infl uenced by the IMF jurisdiction. Compared with 1997, it decreased R&D investment by about 9.9 per cent and the number of researchers it employed by about 11.6 per cent in 1998. This was the fi rst time in South Korea’s industrial development that such a situation had occurred. The public research sector was also affected by the deep recession, but not as

160,000

140,000

120,000

100,000

80,000

60,000

40,000

20,000

-95

Total amount

Public sector

Academia

Industry

96 97 98 99 00

180,000

160,000

140,000

120,000

100,000

80,000

60,000

40,000

20,000

-95

National R&D expenditures (hundred million won)

Number of researchers (persons)

Total number

Public sector

Academia

Industry

96 97 98 99 00


187


severely as industry. It was, however, forced to lay off many researchers during this period, resulting in a 17.1 per cent decrease in their number during 1998. Academia was not affected by the recession, although there was a slight decrease in R&D expenditure and labour. As a whole, the deep recession under the IMF jurisdiction infl uenced the innovation activities of the country’s industry and public research sectors.

However, the effects of the IMF jurisdiction lasted only one year – 1998 – or at most two years. By the turn of the century, the Republic of Korea had regained its dynamism and innovation capabilities. In 1999, just a year and a half after the IMF jurisdiction, the national innovation system reached its pre-IMF jurisdiction (1997) level of innovation vitality. The year 2000 in particular showed far stronger innovation capabilities than those prior to the IMF jurisdiction. This implies that a strong increase in the innovation system’s capabilities helped overcome the recession more quickly than expected.

Many studies argue that, during recession periods, organizations including government have a tendency to decrease their R&D and innovation investments that are not directly related to short-term performance. However, this was not the case for the Republic of Korea. Indeed, the country did not decrease its investment in R&D and innovation activities, and even increased it to a remarkable degree. For example, the government increased its annual R&D budget by about 15 per cent per year after the IMF jurisdiction, even though it was forced to reduce its overall annual budget signifi cantly. In fact, just after the IMF jurisdiction, the general consensus in society was that the deep recession at the time was caused by the economy’s weak science, technology, and innovation capabilities. Society therefore recognized that strengthening the national innovation system and boosting technological innovation was the only way to overcome the economic crisis. As a result, great efforts were made to improve the effi ciency and effectiveness of the national innovation system by increasing R&D investment, recruiting more R&D human resources and refi ning the innovation system’s institutional framework.

It is interesting that industry, being the hardest hit by the recession among South Korean actors in innovation, increased its innovation capabilities to a remarkable degree after the IMF jurisdiction. In 2000,


188


industry reported a 20.5 per cent increase in R&D expenditure, and a 33.9 per cent increase in the number of researchers it employed compared with the previous year. This indicates that industrial companies attained a higher level of dynamism and innovation just after the IMF jurisdiction. Having experienced diffi culties in international markets in the middle of the 1990s, companies recognized the importance of technological innovation in enhancing their competitiveness, and made a far greater effort to increase their innovation potential. Such efforts have resulted in the strong competitiveness of the country’s industrial companies in international markets today.

Role of the government

Recognizing the importance of stimulating a creative national innovation system, the South Korean Government played an important role in overcoming the economic crisis.

First, it required the national innovation system and actor groups to re-engineer their organizations and activities and to improve their effi ciency. In particular, the government demanded that government-sponsored research institutes become more effi cient. Most research institutes therefore retrenched ceasing to use less productive researchers, rearranged their research areas, and improved their R&D resources allocation. The government made great efforts to avoid overlapping investment in national R&D programmes and asked the coountry’s innovation actors to do the same thing.

Second, the government initiated a series of policy initiatives to boost start-up companies. During this period, there was a consensus that start-up companies would be instrumental in overcoming the economic crisis. These companies were regarded as the new growth engine for the country. Many entrepreneurs left existing companies and government-sponsored research institutes. In 1997, the government enacted an Act on Special Measures for the Promotion of Venture Business. As a result, the number of venture companies increased from 2,042 in 1998, to 8,798 in 2000, and 11,392 in 2001.

Third, the government increased its R&D budget signifi cantly. Table 4.6 shows the trend for the government’s R&D budget around the time of economic crisis. The year 1998, the year following the IMF


189


jurisdiction, showed a 2.24 per cent decrease in the government’s R&D budget. However, during the next two years, the rates increased by 13.4 per cent and 15.1 per cent respectively. In 1999 and 2000, R&D budgets increased to a far greater degree than the total government budget. This indicates that the government placed strong emphasis on R&D and technological innovation in overcoming the economic crisis during this period.

Table 4.6 R&D budget trend of the Government of the Republic of Korea (unit: billion won, %)

1996 1997 1998 1999 2000Total governmental budget (A) 60,816 71,407 80,763 88,485 92,658– Increase rate 10.9 17.4 13.1 9.6 4.7R&D budget (B) 2,179 2,768 2,706 3,069 3,531– Increase rate 25.0 27.0 -2.24 13.4 15.1B/A 3.58 3.88 3.35 3.47 3.81

Source: Ministry of Science and Technology, 2000: 427.

Fourth, the government started to promote regional science and technology activities signifi cantly. It recognized that the economic crisis at the time was partly owing to the concentration of science and technology potential in only a few regions. In 1999, the government therefore initiated a Grand Plan for Promoting Regional Science and Technology (MOST, 1999; Chung, 1999; 2002a). Based on this plan, every regional government should initiate its own strategy for promoting science and technology, establish an organization in charge of its regional promotion, and increase its R&D budget. Such efforts aimed to implement regional innovation systems, emphasizing close cooperation between regional innovation actors.

Finally, the government emphasized R&D collaboration between industrial enterprises, PRIs, and universities in order to effectively utilize scarce R&D resources. The commercialization of R&D results was accelerated. During this period, the Republic of Korea created a dynamic national innovation system composed of all these innovation actors. In order to produce world-class technological innovations and products, close cooperation was imperative.


190


Sub-conclusions

The Republic of Korea’s development has been based on its innovation capabilities. In this section, we look at how the country expanded this area since the beginning of its industrialization. Special focus was placed on the second half of the 1990s, as the economy experienced a deep recession during this period. We analyse whether innovation capabilities were diminished at the time, and look at the important role innovation played in helping the country to overcome the recession. Some of the results can be summarized as follows.

First, the country formulated and implemented a competent national innovation system comparable to that of more advanced countries, in the space of 30 years. Because of its short history of economic development, the national innovation system had many structural weaknesses. But the country has overcome these weaknesses and has been able to implement a relatively competent and dynamic national innovation system. Figure 4.3 shows the historical development of the national innovation system according to major actor groups: academia, the public research sector, and industry. In the 1960s, the country had no national innovation system whatsoever and only one PRI, KIST, established in 1966. In the 1970s, only the public research sector was operating in the national innovation system, as there were 13 major PRIs in key technological and industrial areas. No industrial innovation activities existed; academia had no R&D capabilities whatsoever.

However, the country was able to formulate a national innovation system in the 1980s as industrial companies started to increase their R&D and innovation capabilities. During this period, the government initiated a national R&D programme in order to promote interactive learning between industrial companies and PRIs. However, it was not until the 1990s that the Republic of Korea attained a satisfactorily operational national innovation system. As academia secured its R&D capabilities in the 1990s, the national innovation system was comprised of three major actor groups: industry, the public research sector, and academia. It took about three decades for the country to develop a relatively competent national innovation system. This is extremely fast, as an institutional setting, especially at the national level, requires an enormous amount of time and resources. The prompt establishment of


191


its national innovation system has played a key role in enhancing South Korea’s economic competitiveness.

Figure 4.3 Development of the Republic of Korea’s national innovation system

Academia

IndustryAcademia

IndustryIndustry

Publicresearchsector

IndustryPublic

researchsector

Publicresearchsector

Publicresearch sector

1960s 1970s 1980s 1990s 2000sSource: Chung, 2003b: 901.

By the turn of the new millennium, the country had made a great effort to enhance the effi ciency and effectiveness of its national innovation system. The government has refi ned a legal and institutional framework to further accelerate R&D and the innovation activities of major actors, and to encourage interaction between these groups. The country has also increased its R&D and innovation investment to a remarkable degree. As a result, it is now one of the most innovative countries in the world with one of the highest degrees of investment in R&D worldwide. This means that its national innovation system has been enlarged and its effi ciency greatly increased compared with the 1990s. Figure 4.3 depicts this trend in the current decade. It shows the multiplication of innovation actors over the past decades and presents their respective importance in a rather abstract fashion.


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The government has played an essential role in the development of the national innovation system. Since the beginning of the country’s industrialization, the government has implemented a series of policy measures to enhance the capabilities of innovation actors and to encourage interaction between them. Strong involvement has led to the remarkably quick establishment of the national innovation system. Such strong government involvement has been possible because, historically, the Republic of Korea has been a centralized country. Since the middle of the 1990s, regional governments have participated in promoting innovation activities (Chung, 2002a; MOST, 1999). As effi cient regional innovation systems constitute a competent national innovation system (Chung, 2002a), this strong involvement by regional governments in addition to that of the central government will make a great contribution to enhancing the overall performance of the national innovation system.

PRIs have played a very important role in the development of the national innovation system. As discussed above, the country established its innovation system based on the public research sector. This sector has been a very important policy tool for the Republic of Korea, as a developing country trying to establish its own national innovation system. However, it has had to reorient its mission and role over the last few decades, as industry has increased its innovation capacities since the 1980s and academia has developed its R&D capabilities since the beginning of the 1990s. Considering that the public research sector played a pivotal role in the national innovation system, its strategic reorientation based on the rapidly changing technological and economic environment is indispensable. Based on the strong innovation capabilities of PRIs, the country was able to formulate and implement an excellent national innovation system that consists of academia, the public research sector, and industry. Few countries, aside from Germany, the USA, and France, have such a balanced national innovation system.

Finally, the unexpected economic crisis at the end of the 1990s did not have a severe impact on the national innovation system. The recession under the IMF jurisdiction in the fall of 1997 did infl uence the innovation system’s potential. However, this lasted two years at the most. By the turn of the new century, the Republic of Korea had regained its dynamism and innovation capabilities. The country’s impressively


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rapid recovery from the recession was due to the strong increase in the country’s innovation capabilities. Industry, the innovation actor group most hurt by the recession, increased its innovation capabilities to a remarkable degree following the IMF jurisdiction.

As a whole, the Republic of Korea is a very innovative and dynamic country. It has established and implemented a relatively competent and dynamic national innovation system in a very short period. It has invested a signifi cant amount of resources in order to enhance the effi ciency of its national innovation system and increase the capabilities of major innovation actors. The innovation system as a whole produces ground-breaking results and original products. We can ascribe the dynamic development of the country’s economy in this globalized world to its effi cient national innovation system. In the meantime, the country has made a great effort to learn from the successful national innovation systems of other countries such as the USA, Japan, and Germany. Compared with these countries, its national innovation system today is relatively competent. However, considering the hectic competition between countries to attain and implement better national systems, it needs to continue learning from other national innovation systems.

4.3 Legal framework and policies for R&D collaboration

History and classifi cation

The legal framework for R&D activities and collaboration is instrumental in the development of the technological capabilities of enterprises and the nation as a whole. As science, technology, and R&D have the characteristics of common goods, the government should be actively involved in these areas in terms of various policy instruments, including legislation. Based on this legal framework, the government can establish relevant research institutes, initiate national R&D programmes, and motivate technology transfer from universities and research institutes to industrial enterprises. Such a legal framework can be considered particularly important for countries like the Republic of Korea that need to ‘catch up’, as they have modest resources for R&D activities and only a relatively short history of collaboration among innovation actors. With a legal framework and fi nancial incentives, the government can set directions for technological and economic developments, mobilize


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resources, and motivate innovation actors to pursue their R&D and innovation activities effi ciently.

Table 4.7 provides an overview of the evolution of the legal framework for the country’s R&D collaboration over the past fi ve decades.

Table 4.7 Legal framework for the Republic of Korea’s R&D collaboration

Enacted year

Law Characteristics Responsible ministry

1946 Patent Law Non-comprehensive KIPO1972 Law for the Activation of Technological Development Non-comprehensive MOST

1986 Law for the Promotion of Industrial Technology Research Consortia Comprehensive MOST

1994 Law for the Acceleration of Collaborative R&D Comprehensive MOCIE

1995 Law for the Establishment of an Industrial Technology Infrastructure Non-comprehensive MOCIE

2000 Law for the Acceleration of Technology Transfer Comprehensive MOST2001 Science and Technology Basic Law Non-comprehensive MOST

2003 Law for the Promotion of Industrial Education and Industry–Academy Collaboration Comprehensive MOE-HRD

2004 Special Law for Balanced National Development Non-comprehensive MOCIE

Prior to industrialization in the Republic of Korea, there were no laws addressing R&D activities and collaboration. The country enacted the Patent Law in 1946 in order to establish a comprehensive industrial property legal system. Only when the initial base for R&D and technological development was established at the beginning of the 1970s was it possible for the national innovation system to begin collaboration, even though the levels were very low. In 1972, the government enacted the Law for the Activation of Technological Development, establishing the (albeit non-comprehensive) legal framework for industry–university–PRI collaboration for the fi rst time. This law also provided for the basis for establishing Industrial Technology Research Associations to activate joint R&D activities among SMEs. As mentioned above, however, R&D collaboration was not suffi ciently activated during this period.


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In the 1980s, the government initiated a series of national R&D programmes. MOST and MOCIE activated industry–university–public research collaboration in terms of their own national R&D programmes. These national programmes were instrumental in R&D collaboration and activities per se, as the Republic of Korea had insuffi cient R&D resources during that period. The government wanted to mobilize all R&D resources to the greatest extent possible in terms of activating collaboration.

In the 1990s, R&D collaboration among innovation actors was a hot issue as innovation actors’ capabilities increased. At that time, there was a strong need for collaboration among science and technology-related ministries, because most had their own national R&D programmes. Duplication of R&D resources was a sensitive issue. MOST therefore enacted the Law for the Acceleration of Collaborative R&D in 1994. This law prescribed comprehensive contents necessary for R&D collaboration. In particular, it motivated government ministries, regional governments, public companies and institutes, and industrial enterprises to extend their joint investment in collaborative R&D activities. MOCIE enacted the Law for the Establishment of an Industrial Technology Infrastructure in 1995. This prescribed the promotion of industrial R&D activities, industrial training and R&D collaboration.

Since the beginning of the 2000s, the government has shifted its science and technology policy to promote activities at the regional level. Economic and technological potential has for the most part been concentrated in a few regions, such as Seoul, its outskirts, and Dae-Deock Science Town. This new policy emphasizes R&D collaboration at a regional level. In order to solve the problem of unequal economic and technological development, the government enacted the Special Law for Balanced National Development in 2004. This law prescribes the establishment of regional innovation systems composed of industrial enterprises, universities, and PRIs. Regional R&D collaboration has thus been activated to a very large scale.

We can also classify national laws for promoting R&D collaboration into two categories. The fi rst category is composed of comprehensive laws for R&D collaboration. The term ‘comprehensive’ means that the law aims at promoting R&D collaboration only and directly prescribes


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diverse aspects of R&D collaboration. There are four comprehensive laws: the Law for the Acceleration of Collaborative R&D, the Law for the Promotion of Industrial Technology Research Consortia, the Law for the Acceleration of Technology Transfer and the Law for the Promotion of Industrial Education and Industry–Academia Collaboration.

The second category is made up of non-comprehensive laws with only a few articles dealing with R&D collaboration. They include science and technology- and R&D-related laws focused on promoting R&D activities, but also include a few articles on collaboration, as it is an important component of their purpose. The Republic of Korea has many science and technology-related individual laws that include a few articles on R&D collaboration. Thus, fi ve non-comprehensive laws have articles dealing with R&D collaboration: the Patent Law, the Law for the Activation of Technological Development, the Law for the Establishment of an Industrial Technology Infrastructure, the Science and Technology Basic Law, and the Special Law for Balanced National Development.

Several ministries have enacted science and technology-related laws: MOST, MOCIE, and MOE-HRD. MOE-HRD focuses on industrial education and training, MOST on R&D activities, and MOCIE on R&D collaboration. Of course, other laws for promoting R&D activities and collaboration also exist. Indeed, other ministries have initiated science and technology-related laws in order to provide the framework for their own R&D programmes.

Policy programmes for R&D collaboration

While the legal basis was gradually established for the interaction of the academia and enterprises, several major programmes were developed to support R&D capacity and the collaboration between the different innovation actors. Most of them are of relatively recent origin.

Excellent Research Center (ERC) programme. The ERC programme started in 1989 and aims to enhance and accelerate the technological development capabilities and innovation of fi rms by effectively training well-qualifi ed R&D staff and organizing university researchers in such as way as to effectively activate basic research capabilities. Based on the Law for the Promotion of Basic


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Research, it requires the establishment of an excellent research group in well-qualifi ed research-intensive universities in order to effectively accomplish national R&D projects. The total number of researchers in this type of programme should be about 20. Only universities with master’s and Ph.D. courses in engineering are eligible to apply for this programme.

Since the end of 2003, 30 Scientifi c Research Centers have operated in major research-intensive universities. ERCs are in principle promoted for nine years and evaluated every three years for further promotion. The ERC programme has made a great contribution to the development of academic research in the country. It has brought a strong competitive atmosphere to universities, thus enhancing the excellence of academic research. The increase in academic research has led to the effi cient production of well-qualifi ed research staff. This programme could compensate for the weaknesses of the national innovation system and academic research in the 1990s. It has had no direct relationship with R&D collaboration, but has provided its basic infrastructure by strengthening the capabilities of the country’s universities.

Regional Research Center (RRC) programme. The RRC programme started in 1995 with the idea of expanding the ERCs to the regional level. The centres are expected to conduct research on strategic technology areas that are directly related to regional economies. As of the end of 2002, there were 112 RRCs in 15 regions in addition to the metropolitan city of Seoul. The fund is fi nanced jointly by the central government, regional governments, hosting universities in the regions, and participating industrial companies. This programme is similar to the ERC programme, but more related to regional economy. RRCs have been expected to become regional hubs that attract innovation actors, in particular industrial companies. As of the end of 2002, about 85 per cent of the centres were engaged in engineering fi elds and only 15 per cent in the natural sciences. In this sense, RRC research areas include industrial technologies that are directly related to regional economies, especially in relatively less-developed regions. This programme has contributed signifi cantly to the development of regional technologies and economies, as it has helped regional universities, which had low R&D potential, to strengthen their capabilities.


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Technology Innovation Center (TIC) programme. The TIC programme began in 1997 and has its origins in the Law for the Establishment of an Industrial Technology Infrastructure. It aims to develop region-specifi c technologies by aggregating the technological resources of regional universities, companies, and PRIs into specifi c centres located in regional universities or PRIs. These centres were expected to become supply centres of region-specifi c technologies, activate well-qualifi ed start-up companies, and promote technological innovations in region-based SMEs.

This programme promotes the setting-up of research facilities and equipment, joint research among universities, PRIs and industrial companies, training of industrial personnel, the supply of technological information, the supply of start-up space, and the technological and management guide for regional SMEs. In this regard, the programme has very comprehensive objectives concerning the activation of R&D collaboration at the regional level. However, it has focused more on providing research facilities and equipment for universities that could be jointly used by regional innovation actors.

MOCIE provides about 1 billion won per year for fi ve years to support the establishment of centres and the purchase of research facilities and equipment. Operating costs and centre space are supplied by the regional government and participating industrial companies. As of the end of 2003, there were 39 TICs operating in region-specifi c technology areas. In July 2005, this programme was merged with the RRC programme and renamed the Regional Innovation Center programme.

Technology Business Incubator (TBI) programme. The TBI programme started in 2000 based on the Law for the Establishment of an Industrial Technology Infrastructure. It aims to encourage the creation of start-up companies by providing a series of services from start-up to commercialization of research results. Universities or PRIs are selected to provide research funds, management, technological services, and information to potential entrepreneurs or start-up companies that are established within one year.


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Participating companies receive about 100 million won to commercialize their R&D results and, should they succeed, they reimburse half of the funding originally received in fi ve years. Selected incubator universities or research institutes should provide a working space, basic equipment, offi ce furniture, management and technical services, as well as contracting services with venture capital. As of the end of 2003, there were 166 TBIs in the Republic of Korea. In 2003, about 930 companies applied for funds, 322 of which (about 34.6 per cent) received them.

Business Incubator (BI) programme. The BI programme began in 1993 based on the Law for Supporting the Start-up of Small and Medium-sized Enterprises. This programme selects business incubators in universities, PRIs, and private companies to provide various facilities for entrepreneurs in order to increase start-up success rates. BI supplies a series of incubation services, such as management, technology, fi nance, and marketing to potential or new entrepreneurs that lack knowledge in commercialization.

If a university or PRI is selected as a business incubator, the Small and Medium Business Administration (SMBA) makes a contribution of 700 million won maximum, with BI making a matching investment of 20 per cent of the total incubator budget. The funds must be spent on constructing or repairing the incubating buildings, purchasing common purpose facilities or equipment, expensive software, and other facilities. As an incubator, a private company or individual is provided with at most 1 billion won by the SMBA. BI then invests 50 per cent of the total budget as a matching fund. As of the end of 2003, there were 283 BIs in the Republic of Korea. A total of 238 incubators were established in universities, 20 in PRIs, and 7 in private companies; and there were 18 ‘other’ incubators.

The Technopark programme. The Technopark programme began in 1997 based on the Special Law for Supporting Industrial Technology Complex. In the Republic of Korea, regional governments have made great efforts to establish Technoparks. The programme aims at providing a framework for collaboration between industry, universities, and institutes. It tries to make a virtuous cycle out of technological innovation: a good idea from a university leads to technological


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development, which spurs on a fi rm’s innovation and commercialization activities, and the profi t is reinvested in technological development. In this sense, Technopark is expected to play a role of aggregation by connecting university personnel with the commercialization capabilities of fi rms. In addition, it is meant to support start-ups, R&D activities, prototype production, information fl ow, and training and education. Six Technoparks in the country’s regions were selected for the programme in December 1997: Song-do, Ansan, Choong-nam, Gwangju, Daegu, and Gyeong-buk. For the six years between 1997 and 2003, about 522 billion won were invested: 150 billion funded by MOCIE, 186 billion by regional governments, 91 billion by private companies, and 95 billion by others. These six Technoparks play an important role in collaboration among regional innovation actors.

In December 2003, the national government selected fi ve additional Technoparks for the programme: Jeon-buk, Chooung-buk, Jeon-Nam, Gangwon, and North Gyeonggi. They received about 50 billion won over fi ve years (10 billion per Technopark). As a result, most regions have a Technopark established mainly by the central government. The Technoparks are expected to play an essential fi eld role in industry–university–institute collaboration.

Industry–University–Institute Consortium programme. The SMBA initiated the Industry–University–Institute Consortium programme in 1993. Based on the Law for the Promotion of Support to SMEs and Purchase of their Products, it aims to boost the technological capabilities of SMEs by establishing consortia between SMEs, universities, and PRIs. In particular, it develops new technologies that could not be developed by SMEs alone by activating collaboration between SMEs and universities or PRIs within consortia.

These innovation actors have been expected to collaborate very closely with others in their consortium. Broadly speaking, the SMBA and provincial or metropolitan city offi ces are participants in these consortia. At least seven SMEs and a regional university should participate in order to make a consortium. The research fund is fi nanced by the SMBA (50 per cent), the regional government (25 per cent), and participating SMEs (25 per cent). About 218 consortia were formed nationwide in 2004 to support 2,900 SMEs with developing


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new technologies. This programme presupposes the active support of regional government. In particular, provincial and metropolitan offi ces have engaged in the consortia since 1999, as regional innovation policies have been disseminated in society. In order to enhance the performance of Industry–University–Institutes Consortia, each regional government organizes compulsory consortium associations (every consortium in their region must be a member). Within this association, members share information, discuss common interests, and present consortia performances. In addition, in 2003, these associations came together to form a National Association of Industry–University–Institute Consortia. According to an independent evaluation conducted between 1993 and 2000, 1,421 SMEs participated in consortia, 1,911 patents were applied, 4,852 prototype products developed, and 3,350 process improvements made. This programme’s success makes it very popular among the country’s SMEs.

We summarize the major characteristics of these programmes in Table 4.8.

Table 4.8 Major characteristics of R&D collaboration programmes

Programme Ministry Major targets

Programme scope

Major characteristics

Evaluation

ERC MOST Research universities Nation-wide Joint research RRC MOST Regional universities Region Joint research

TIC MOCIE Cluster Region Comprehensive collaboration

TBI MOCIE Start-ups Nation-wide Incubation BI SMBA Start-ups Nation-wide Incubation

Techopark MOCIE Cluster Region Comprehensive collaboration

I–U–I Consortium SMBA SMEs Nation-wide Joint research

Key to Table 4.8:: Successful, : Very successful.ERC: Excellent Research Center; RRC: Regional Research Center; TIC: Technology Innovation Center; TBI: Technology Business Incubator; BI: Business Incubator; I–U–I: Industry–University–Institutes.

Despite the fact that there has not been a systematic evaluation of these programmes, according to our interviews with experts involved in these programmes, such as entrepreneurs, professors, researchers, and


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government offi cials, the ERC, RRC, and Industry–University–Institute Consortia programmes evaluated as very successful. In particular, the TIC, TBI, BI, and Technopark programmes were found to be most successful. In general, we can consider that most programmes have made a great contribution to R&D collaboration among innovation actors and to the national innovation system as a whole.

4.4 Conclusions

Since the end of the 1980s, the concept of the national innovation system has been disseminated all over the world as the key to the effective development, exploitation, and diffusion of technological innovations. This concept emphasizes close interaction and collaboration among innovation actors, primarily universities, PRIs, and industrial enterprises. However, most studies up to now have not dealt with exploring mechanisms and the intensity of interaction and collaboration. This study has therefore focused on government as one of the innovation actors, and examined the effectiveness of government action from the point of view of R&D interaction among innovation actors within the national innovation system.

The Republic of Korea’s efforts to enhance its innovation capabilities are characterized by very close cooperation between the major actors. The government has played an important role in this. Its role in innovation promotion has been called its ‘innovation policy’, and it has made a great contribution to the development of the national economy. In particular, the government initiated the National R&D Programme in 1982, in which it forced PRIs and universities to carry out joint R&D projects with companies. It hoped to accelerate the commercialization of R&D results as soon as possible in order to enhance national economic competitiveness. However, only technology-intensive large enterprises could participate in this cooperation. As private companies have increased their R&D capabilities since the beginning of the 1990s, the government has initiated a series of legal frameworks to activate R&D and collaboration among innovation actors. As a result, actual R&D collaboration activities have increased continuously in number. The country has adopted the concept of the national innovation system and developed both a legal framework and appropriate programmes to provide mechanisms for implementation. However, it was late


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in establishing its national innovation system compared with other countries. The national innovation system began with the establishment of PRIs in the 1970s, the strengthening of industrial R&D capabilities in the 1980s, and the enhancement of academic R&D capabilities in the 1990s. It was therefore at the beginning of the 1990s that the Republic of Korea fi nally established its national innovation system. Up until the mid-1990s, the country had no space for active R&D collaboration.

The country has laid major emphasis on the preparation of an appropriate legal framework to activate R&D collaboration. In the early days of the national innovation system, the legal framework was concentrated mainly on the establishment of innovation actors; R&D collaboration was not a hot issue. However, since the mid-1990s the Republic of Korea has initiated several important policy programmes for R&D collaboration. To this effect, it has enacted comprehensive legislation for R&D collaboration. This legal framework has allowed the government to initiate additional policy programmes to promote R&D collaboration. There has been competition among science and technology-related ministries, such as MOST, MOCIE, and the SMBA in preparing laws and policy programmes for R&D collaboration. As a result, the legal content and policy programmes have overlapped. For the effective promotion of R&D collaboration, such overlap is problematic and should be avoided.

Legal framework and policy measures have activated R&D collaboration in the national innovation system. Our analysis shows that more than half of South Korean industrial enterprises had an experience of R&D collaboration, most of which concentrated on technological development. With regard to R&D collaboration at the regional level, it was relatively low compared with the more advanced regional innovation systems in other countries. The Republic of Korea therefore needs to activate R&D collaboration in order to implement competent national and regional innovation systems. For this purpose, we can identify the main policy implications as follows.

First, the national innovation system should shift its focus further from the establishment of innovation actors to the activation of R&D collaboration. R&D collaboration is relatively new to the national innovation system. It should therefore be made routine in the country,


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and incorporated by individual innovation actors as well as into the national innovation system as a whole. The main innovation actors should adopt R&D collaboration as an important strategy for their competitive advantage as, in the current turbulent technological and economic environment, competent actors cannot produce successful innovation without engaging in collaboration with others. The central and regional governments should also cooperate closely with one another to induce innovation actors to participate actively in R&D collaboration, for example by offering to match funding put forward by industry, by encouraging information-sharing practices, and by emphasizing joint planning in national R&D programmes.

Second, the government should diversify policy measures to activate R&D collaboration. Current policy measures have focused on joint research, incubation, and institution building, aiming for technological development. However, other important policy measures should be provided, such as training, education, information dissemination, and technological guidance. These fi elds of collaboration are prescribed in current laws, but have not been actively implemented. It would be a good strategy for the country to initiate independent policy programmes for these other, less common means of collaboration.

Third, policy measures to activate R&D collaboration in education and training should be implemented. Most collaboration in the country has been concentrated on R&D activities per se. However, qualifi ed R&D personnel conduct such activities, so the government should take the policy measures to activate training and education, especially between universities and industrial enterprises. In this regard, the Industry–Academia Collaboration Boards of each national university, established under the revised Law for the Promotion of Industrial Education and Industry–Academia Collaboration, should play an essential role.

Fourth, in order to activate R&D collaboration, the potential of national universities, in particular regional universities, should be strengthened. Universities have focused more on education than on R&D activities. In this sense, they are still the weakest point of the national innovation system. According to our study, enterprises in the Republic of Korea prefer to collaborate with universities in R&D. Important policy measures such as the ERC and RRC programmes are signifi cant. However, other programmes should be created. For


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example, the training and further education of researchers and student training programmes in industrial companies would be good measures for activating collaboration. Co-professorship for competent engineers in industrial enterprises is another possible form of R&D collaboration.

Fifth, more PRIs should be created. PRIs have been important players in the national innovation system and should remain so in the future. Even though private companies have played a more important role than PRIs in terms of R&D since the end of the 1980s, there are many areas in which PRIs can play an essential role. For example, they should play a leading role in basic science and strategic technologies oriented towards the long term, as the country lags behind more advanced countries in those areas. In addition, PRIs are important assets, especially considering that the Republic of Korea is a centralized country. However, only about 20 government-sponsored research institutes are located in a few regions. These PRIs play a small role in R&D collaboration at the regional level. The government should establish several additional small PRIs, in particular in the fi elds of emerging and key technologies. These new institutes should preferably be located in areas that have no such existing institutes.

Finally, the country should establish its specifi c model of R&D collaboration. The national innovation system has unique characteristics. For example, PRIs have played a very important role in the science community, and there are many technology-intensive start-up companies. In addition, the central government has been very strongly involved in the national innovation system, and regional governments today have started to recognize the importance of science and technology in their economic development. By actively using the Republic of Korea’s assets in the national innovation system, the country should establish and implement competent national and regional innovation systems. These efforts would be also helpful for other countries.


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V. IN SEARCH OF THE TRIPLE HELIX IN CHINA,POLAND, AND THE REPUBLIC OF KOREA

Virginia Acha and Michaela Martin

5.1 A tale of three countries and the search for the Triple Helix

The three case studies above were undertaken to analyse the development of academia–industry linkages and how governments can enhance these linkages for the overall benefi t of the economy. They also reveal much about the role of academia–industry interaction in the course of economic development, and the limits to what they can be expected to contribute to a country’s mix of innovation policies and practices. As will be shown, these limits are found in the organizational and institutional strengths and weaknesses of the national and regional innovation systems. The core elements of these systems – the fi rms, research organizations, legislative framework, and government – are discussed in detail below with reference to each of the case studies. Despite the differences in context, there is an unmistakable coherence in the lessons emerging regarding each of these core elements.

Each of these elements will be discussed in turn, beginning with the architects of the policies for academia–industry linkages – the governments. By understanding how and why governments in Poland, the Republic of Korea, and China made the policy decisions that they did and the instruments they chose to use, we can better assess how well objectives were met and what the limits to these policies are. The research base in these case studies will then be reviewed, as in all three cases it plays an active role in promoting general policies and specifi c instruments to support academia–industry linkages. After we review this side of the academia–industry equation, the role of fi rms and industrial dynamics in these narratives will be discussed. All three countries discussed in the case studies have developed legal frameworks and provided incentives to encourage academia–industry linkages, and we consider in Section 5.1 the impact of these described by the authors for the three countries. In Section 5.2, we draw together the lessons from these case studies to put forward some critical arguments about the role


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of academia–industry linkages in a developing-country context and the priorities for government.

Government and policy-making

We would not wish to understate the differences between the governments of Poland, the Republic of Korea, and China, nor would we wish to ignore the dramatic changes in government approach that have taken place over the last decades of the twentieth century and the early years of the twenty-fi rst. In reading each of the three case studies, it is striking to note how the government is taking a strong role in the steering of science policy, which could be characterized broadly as following a dirigiste approach to science, technology, and innovation. By dirigiste, we mean a policy approach of direct intervention to shape economic development. This is certainly expected in centrally planned economies, but many infl ections of dirigisme are also evident in the transition economies of China and Poland, as well as in the Republic of Korea.

Moreover, this dirigisme in science, technology, and innovation policy is also still broadly centralized, with regions only very recently assuming some of the direct measures to support local initiatives of this sort. Of the three cases, Poland seems to have the most established government capacity at a regional level, with respect to policy and instruments to support science, technology, and innovation in general. The importance of the regional levels of policy-making may refl ect the overall administrative structure of the country. In Poland, the voivodships (regional administrative units) have been in place since the Middle Ages, although reorganizations have occurred several times since then.

Below, we will attempt to characterize the basic approaches pursued by each of the three governments to enhance academia–industry linkages. These approaches could be called planning, substitution, and orchestration. The planning approach relates to the control and ownership structure of both the research base and industry, but it also refers to the tools used by government, such as planned investment in science and technology with established objectives and targets to be reached within a given timeframe. The orchestration approach focuses on the development of each innovation actor with the underlying objective that each actor conform with the basic conditions for fruitful


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In search of the Triple Helix in China, Poland, and the Republic of Korea

collaboration in the interest of overall scientifi c and technological development. Besides this focus on the development of each actor, it also enables the elaboration of a policy framework for collaboration which itself relates to the particular capabilities of each actor at a given point in time. Substitution, fi nally, is the preferred mode of intervention by government when one of the innovation actors experiences serious diffi culties in collaboration and government takes action to back up the actor.

Chinese planning

One of the major fi ndings arising out of the study of national innovation systems is that the national economy benefi ts when actors function in networks and clusters, and when there is a considerable amount of interaction. However, innovation actors also need coordination in terms of policy development and in the defi nition of roles. In formerly centrally planned systems, coordination was achieved at the level of economic branches, which integrated training and research structures as service providers. These direct lines of authority became diluted in China, when responsibility for part of the higher education institutions (HEIs) and the public research institutes (PRIs) was transferred to provincial governments, while central government and the ministries maintained responsibility over other parts of the sector.

As described in the case study, the Chinese Government is the most dirigiste of the three countries. This is refl ected in the substantial ownership and control that it continues to hold over both the research base and industry. However, Chinese private industry is rapidly expanding its own share of activity in science, technology, and innovation. Nevertheless, the central Chinese Government appears to play a strong directing role in most matters related to science, technology, and innovation. The government has pledged to make twenty-fi rst-century China ‘an innovation-oriented society’ and has set out a 15-year plan (Medium and long-range science and technology development plan, 2006–2020) to achieve this (Suttmeier, Cao, and Simon, 2006). This is a step in what analysts and the case study authors refer to as a 20-year programme of policy and institutional reform in science, technology, and innovation.


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The Chinese Government has been increasing its investment in science and technology. In 2004, it spent over six times the amount spent in 1993, namely 432.9 billion yuan (Chapter II). Gross domestic expenditure on R&D was 15,987.8 billion yuan in 2004, which was estimated as 1.23 per cent of GDP (Chapter II). The UNESCO database calculated China’s GERD as 1.31 per cent of GDP in 2003, valued at US$84.6 billion at purchasing power parity (Table 1.2). As Table 1.2 describes, this puts China’s GERD at nearly four times the expenditure of the Republic of Korea and over 30 times that of Poland. Per capita metrics, however, provide a different picture, with China (at US$65 per capita) and Poland (at US$63 per capita) on a similar level, far behind the Republic of Korea (US$480 per capita). Nevertheless, scale is important, and the volume of expenditure in China is almost as noteworthy as the rapid escalation of expenditure over the period 1996 to 2003, which averaged 23 per cent growth per annum.

The authors of the case study also note a parallel increase in research personnel, and in science and technology publications and patents. The government has been restructuring the research base to better support innovation and help China stay at the international frontiers of science in key technologies. As revealed in the label Medium and long-range science and technology development plan, Chinese policy-making in this fi eld uses a planning approach at its core, where the ‘input:output’ logic seems to predominate. In the case study, we can see evidence of how policies and investment are strongly infl uenced by science and technology input (labour, funds) and output measures (patents and publications). Despite the considerable changes in the markets, Chinese policy-makers still have some way to go before developing a more nuanced view of innovation.

Universities in China have a long history of engagement with industry, which preceded the founding of the People’s Republic of China. As Xue and Zhou describe in Chapter II, the role of universities was always to provide training and basic research to support fi rms. With the reforms of 1985, universities were tasked with developing even closer ties with industry, particularly in disciplines such as engineering. A number of forms of engagement have since developed, including informal consulting, technology contracts, technology transfer, licensing, joint research centres, university-based science parks, and


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university-run enterprises (Chapter II). Of these, the most unusual are the university-run enterprises, which are fi rms active in production managed and operated by universities. Although not frequently found around the world, they have their roots in the university-owned factories of the 1950s, which were commonplace in China to provide students with hands-on training (Chapter II). The authors also note that the most common linkages have in fact been for technology contracts and university-run enterprises, and that both have been fi nancially important to the universities. However, in recent years, the government has encouraged universities to ‘de-link’ their enterprises to allow these fi rms to more effectively integrate their international markets and to protect the universities from wider commercial risks (Chapter II).

Since the 1990s, the Chinese Government has also placed greater emphasis on the role of universities and investment in tertiary education. The policy view in the 1985 restructuring was to guide China’s research organizations through incentives and regulatory controls to better serve the needs of economic development. This process has continued through the present, with government funding now accounting for less than half of the operating budgets of several universities. Nevertheless, universities have been more stringently controlled under central planning than production units, and this degree of control is still in evidence (Chapter II). Xue and Zhou argue that the government’s infl uence over research organizations (including universities) could be further limited to providing the right infrastructure to encourage science and innovation (such as markets for technology, incubators, and other support services), improving the innovation environment through favourable tax and fi nancial terms, and generally supporting industrial development.

Polish substitution

The government is effectively underwriting research and innovation in Poland, with the shares of gross domestic expenditure on R&D funded by industry and government at opposite proportions to the OECD average (Table 1.3). As noted previously, the authors of the case study indicate that Community Innovation Surveys in Poland recorded the disappointing fact that ‘only 6.7 per cent of all surveyed enterprises were engaged in R&D activities ...’ (Chapter III). It may be that the OECD fi gures indicate some signifi cant improvement in business investment in


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R&D, or that very few companies are investing substantially in R&D, to bring up the current BERD (business expenditure on R&D) to 30.3 per cent according OECD data (Table 1.3).

Despite this, the view among policy-makers and many Polish analysts is that business will continue to invest relatively little in R&D in the short term and that it is therefore up to the Polish government to make up the shortfall to ensure that the country keeps pace in science, technology, and innovation.13 A more immediate objective that is also forcing government investment is to meet the Lisbon Goals on R&D expenditure in Europe, which set a target of 3 per cent of GDP for all Member States by 2010. The 2006 status report for Poland indicates that the government expects to meet a level of 2.2 per cent by 2010, but only with a considerable increase in public expenditure. The pressure is clearly on the government to be the primary motor for science, technology, and innovation in the foreseeable future.

It is also clear that policy development in R&D and innovation in Poland is tightly linked to the accession of the country to the European Union (EU) and to the EU policy framework known as the Lisbon Strategy and the priorities of the present EU research framework. These are laid down in the Directions of Scientifi c, Science-technology and Innovation Policy of State through 2020 prepared by the Ministry of Scientifi c Research and Information Technology (MSRIT) in December 2004.

Delivering this investment and guiding innovation more widely in the economy is a considerable task, and one that is spread across Ministries, such as MSRIT (which has replaced KBN, the State Committee for Scientifi c Research), the Ministry of Economy and Labour (MGiP, which has replaced a previous Ministry of Economy), the Ministry of National Education and Sport, and others on particular lines of research (such as defence and health; see Chapter III). Not only are the ministries a shifting landscape, but among these new ministries,

13. In Chapter III, the authors state that ‘[t]he trends observed in this respect [the structure of R&D fi nancial sources] are just the opposite of what the Lisbon Strategy intends and of what is typical in the most developed economies. For the whole of the last decade the state budget has been the main source of fi nancing R&D activities in Poland ... Moreover, the share of the state budget has grown, while the enterprise share in R&D fi nancing has decreased.’


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civil servants are still deciding on responsibilities for the oversight of research, higher education, and innovation. In their case study, the authors present a complex division of labour, with the Innovation Unit located at the Ministry of Economy attempting to piece together the different policy initiatives launched by different departments. Of course, two powerful trends are making this process more complicated: (1) the legacy powers and responsibilities of the Polish state under central planning; and (2) initiatives from the EU, which are shared across different parts of government in Member States.

Table 5.1 provides a summary of the various public programmes supporting research and innovation in Poland. As it demonstrates, institutions to support science, technology and innovation have multiplied at a considerable rate, partially due to EU membership and the access that Polish organizations have to several programmes in the fi eld of research and enterprise development. The case study shows that links between these institutions do not always appear to exist, probably because they report to different departments or levels of government. Once in place, they are hard to eliminate, and so the support landscape becomes more crowded over time. It is not clear from the case study whether these institutions or initiatives have had positive impacts and/or whether fi rms and researchers value them. The fl avour of their establishment is very much one of a ‘science’ or, better said, ‘science policy’ push, rather than market pull, which seems to refl ect the linear model of innovation mentioned earlier.

The emphasis from government has been on alerting and informing enterprises of the benefi ts that await them in engaging with the research base. The authors argue that a certain level of prejudice and ignorance is frustrating the successful development of academia–industry engagement in Poland. Kondratiuk-Nierodzinska and Olechnicka (Chapter III) note that ‘although Polish R&D institutions are characterized by having a relatively high technological potential and employ excellent specialists in many areas, they are not usually considered as worthy partners by enterprises because of their involvement mainly in basic instead of applied research. Another problem is that new technological solutions developed by R&D institutions rarely fi nd applications in industry because of a lack of dissemination of new knowledge created during their research


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activities.’ However, these views were not tested directly with fi rms, and the lack of ‘demand for innovation’ in Poland and other Central and Eastern European Countries (CEEC) has been described by others as having multiple rationales (Radosevic, 2004).

Table 5.1 Public support programmes for research and innovation in Poland

Intervention / programme

Target Provider Objective

National System of Services for SMEs

SMEs Coordinated by Polish public sector; Polish Agency for Enterprise Development, Delivered by 200 independent institutions

Provide advice, training, information, and fi nancial services for SMEs

Regional Centres of Patent Information (29 centres)

Firms, individuals

Embedded in HE (polytechnics) and public research organizations

Technology transfer; data on patent information; promotion of IPR

Technology Transfer Centres (29 centres)

Firms Part of funding drawn through other initiatives, such as EU Innovation Relay centres, Technology parks

Technology and knowledge transfer from research base to industryConsultancy services, especially for SMEs

Innovation Relay Centres (4 regional consortia; 15 regional institutions)

Firms,individuals, research organizations, others

EU Promotion of innovation and technological exchange between different EU organizations

Euro Info Centres (12 centres)

SMEs EU and affi liates (co-fi nancing)Affi liated to development agencies and chambers of commerce

Integration of SMEs within the EU common marketStandards, issues for trade

Contact Points for the Framework Programme (National, Regional, Sectoral)

Research organizations and individualsFirms

EU FrameworkMSRIT funds the Contact Points

To encourage Polish scientifi c teams and individual researchers to participate in EU Framework Programme

Centres of excellence Research organizations and individuals

EU Scientifi c world-class laboratories cooperating actively with industry and other research users

National Network of Innovation (KSI)

SMEs Developed by those already engaged in HE or Regional Centresof Technology transferDelivered by independent institutions

To support the creation of conditions for new technology transfer and commercialization and realization of the innovative undertakings in SMEs

Source: Details provided in the case study on Poland (Chapter III).


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Under central planning and until about 1985, linkages and collaboration were far more directly controlled by central government. All research, development, and design activities occurred within the research units, and the government’s planning body allocated the funding for them. After 1985, funding was also allocated by enterprises, through donations of a percentage of their sales (1–1.3 per cent) to the Central Fund for Research and Development (Chapter III). By including enterprises in the direct funding of science and technology, the policy expectation was that enterprises would have greater incentives to make use of the science and technology produced. However, as the majority of these funds went to research organizations not linked to enterprises, the impact on businesses was minimal.

A number of policy changes related to the regulation and funding of research, development, and design activities marked the beginning of a transition. Government was expected to move from a controlling to an enabling role, although funding responsibilities were still largely in its purview. Donations from enterprises for research were eliminated. Without this directing hand, there is now a scarcity of academia–industry partnerships, which has generated debate and a resolve among policy-makers to design special programmes to ‘mend the problem’ (Chapter III). Funding for research has been restructured to encourage collaboration between industry and the research base, with vehicles such as ‘targeted projects’. These are research projects that are required to provide support to innovation in enterprises. They are competitive and go through a peer review process, with fi rms covering up to 50 per cent of the total research costs (SMEs can cover up to 70 per cent). These costs can represent joint research with HEIs or the purchase of their services. Over the period 1994 to 2001, 7,198 projects were funded, of which over a third were funded in 2000 and 2001.14 Clearly, this programme generated much interaction between enterprise and the academic sector, although the Polish case study does not present any details about their results or the value of these projects to the participants, or of their legacy to academia–industry linkages.

Poland’s approach to science policy is one of direct intervention through funding where the funds are invested in the research

14. This analysis was drawn from the data provided in Chapter III, Table 3.10.


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organizations. In this sense, it is partially in keeping with the policies of the past and partially driven by European funding streams. It is a ‘supply push’ approach to the development of academia–industry engagement, and one that seems to have not yet borne fruit, given the current concerns of the case study authors over the scarcity of academia–industry linkages despite eight years of ‘targeted projects’ and a total investment of over PLN1.533 billion (currently valued at over US$550 million). A more recent initiative (Measure 1.4.1 of the ‘Development of entrepreneurship and growth of innovativeness through strengthening of business support institutions’) supported under European structural funds drops the requirement to spend the funds on the research base. Instead, industrial and pre-competitive research can be conducted by fi rms and/or groups of fi rms, with or without collaborative links to research organizations (Chapter III). This may indeed signal a change in the government’s appraisal of the role of fi rms in encouraging innovation in the Polish economy. By supporting fi rms in R&D collaboration, Polish policy-makers are recognizing that whether fi rms collaborate with other fi rms (the most common partnership for innovation in market economies) or with the research base, they must be seen as essential drivers in the process.

Orchestration in the Republic of Korea

Throughout its rapid process of economic development in the latter half of the twentieth century, governments of the Republic of Korea have successfully orchestrated investment in science, technology, and innovation at a very substantial level. This is currently refl ected in the high placement of the science and technology agenda in government, with the promotion of the Minister for Science and Technology to Deputy Prime Minister (Chapter IV) in 2004 in order to more effectively coordinate science and technology-related activities under the so-called Science and Technology Innovation Offi ce. In the Republic of Korea, this orchestration of policy across government and other non-governmental organizations (such as chaebol groups, fi rms, and independent research organizations) has been structured under fi ve-year plans, beginning with the First Five-Year Plan for Economic Development in 1962. As early as 1967, a Science and Technology Promotion Act was passed, then revised in 2001 under the Basic Plan for Science and Technology. As Chung


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notes, ‘[s]ince then, the government has intervened very strongly in the areas of science, technology, and innovation’ (Chapter IV). Throughout this process, the focus has been on placing industrial development as the driver of these investments. In the fi rst decades, policies were directed at producing engineers who were more highly qualifi ed and to absorb and ‘digest’, as Chung describes it, imported technologies.

These strategies were highly successful in many areas of technology and industry, as reviewed by Hobday et al. (2004). The outcome was the emergence of some very large and technologically capable private-sector fi rms and fi rm groups (chaebols). The government’s infl uence moved from direction to orchestration in the 1980s, as these large fi rms and industrial groups exerted a more direct infl uence on the rate and course of evolution of Korea’s national innovation system and planned investments in science and technology. In addition to the private sector, the Ministry of Science and Technology (MOST) also had to coordinate policy development and implementation with other ministries, such as the Ministry of Commerce, Industry and Energy (MOCIE), the Ministry of the Environment (MOE), and the Ministry of Information and Telecommunications (MOTI) from the 1980s onward (see Chung in Chapter IV). This practice of strong coordination and harmonization of goals in science, technology, and innovation continues today. It is currently managed by the Presidential Committee on Science and Technology established in 1999 to better coordinate innovation policies across ministries (see Chung in Chapter IV). Among the ministries, there is a clear division of labour and responsibilities.

Seoul has dominated science and technology activities in the Republic of Korea, and this geographical centralization is now a focus of government policy. The objective to decentralize activities and strengthen the economic development of all regions is now a priority to create a more balanced development of the country. Government is doing this by encouraging actors in the regions to collaborate, and universities are to play a key role in this. The university sector has been a relatively small player in the Republic of Korea’s innovation system (see Tables 4.3 and 4.4 above) until recently, and the government is aware that the sector needs to be further developed. This is not to say that academia has not been working with industry to support technological development and innovation. However, most linkages of this sort


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involved research institutes (such as the Korean Institute of Science and Technology) and not universities. Since the 1990s, a policy has been established to directly involve and promote universities, in order to meet the challenges of competing internationally and to engage in academia–industry linkages for the benefi t of the economy, with policy measures such as Industry–University–Institute Consortia (dating from 1993), research centres (which are the vehicle for joint research), science parks, and incubators. Chung notes that while all of these measures have enjoyed success, the research centres (ERCs and RRCs) have been the most successful (Chapter IV). Universities, in particular those located outside of Seoul, have thus become the latest target of government action, with the objective of strengthening their capacity to act as innovation catalysts for regional economic development.

The research base

Research organizations are both publicly and privately owned in the case studies presented, and are often specialized in certain areas of study, functions (e.g. testing laboratories), and industries. More than universities, research organizations are ‘legacy institutions’ in the present-day innovation systems of China, the Republic of Korea, and Poland, in the sense that they have been created in the past and that they remain an integral part of the innovation system, despite the fact that the effectiveness of their contribution to this system has somewhat declined.

Research organizations

In Poland and China, the signifi cant numbers of research organizations in operation are a legacy of central planning, in which these R&D units played an important role in providing the research and design inputs to the wider production system. Both countries followed the Soviet model of placing PRIs under the authority of their academies of sciences, in the framework of their respective planned economies. Thus, the R&D and production fi elds, and the R&D and human resource development sectors used to operate separately; such divisions do not exist in countries where universities have assumed the three roles simultaneously.

In all three countries, PRIs have undergone major reforms. By 2003, there were 784 research institutes in the private and public sectors


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in Poland, including 146 privatized R&D units, 184 PRIs (including 86 R&D units and 81 Polish Academy of Sciences institutions) and 453 R&D units in fi rms (Chapter III). The last of these (R&D units in fi rms) are not necessarily contract research organizations, but appear rather to be R&D departments within fi rms. According to the authors’ calculations of published statistics, the R&D units (excluding those in fi rms) absorbed a total of 52.7 per cent of all Polish GERD in 2001, of which private R&D units accounted for 20.9 per cent of GERD and public R&D units accounted for 31.8 per cent (Chapter III). Clearly, although declining in relative numbers, research organizations in Poland continue to play a dominant role in the research base, as refl ected in the high amount of funding they receive (Table 1.3).

In China, the total number of research institutes in 1999 was 4,728, of which 664 were already going through a process of merging with companies or being reorganized into companies (Chapter II). The authors group these research institutes into three main groups: those belonging to the Chinese Academy of Sciences (CAS) (that specialize in a particular fi eld of research); those belonging to national ministries (engaging in a range of research activities but with an emphasis on experimental and development work); and those belonging to provincial government (Chapter II). There have been several efforts to restructure these research institutes to improve accountability and performance and to link them more directly to industry. Following a policy strategy of ‘trial and error’ (as described by the authors), research institutes have undergone considerable restructuring, with many becoming parts of fi rms in their own right. Although this has resulted in a reduction of nearly seven percentage points in its share of funding in four years, the sector still accounted for 21.95 per cent of China’s GERD in 2004 (Chapter II).

The case study on China explores one of the restructuring policies affecting research institutes – the Knowledge Innovation Programme (KIP) launched in 1998 to restructure the existing 120 CAS institutes. As they are described, these research institutes were ineffi cient, unfocused, and out of date (Suttmeier, Cao, and Simon, 2006; see Chapter II). The purpose of KIP was to rationalize the numbers to achieve a more focused elite of research institutions able to operate at the global frontiers of science and technology. Guiding future investment is a


220


policy to link funds with evaluation, with a careful eye to publications in Science Citation Index-catalogued journals, patents and copyrights granted. Scholars have commented on the broad remit of these research institutions in terms of basic research, relevance to industry, graduate training and operation of hundreds of companies (in collaboration with local governments), and the managerial chaos that can ensue from having so many objectives to meet (Suttmeier, Cao, and Simon, 2006). In China, research institutes remain the principal vehicles for the government to maintain the momentum on science and technology and to guide the research agenda.

Quite unlike the Polish and Chinese cases, the Republic of Korea began with one research institute, the Korean Institute for Science and Technology (KIST) in the 1960s. More research institutes were created in line with industrial policy. In the 1970s, newly established research institutes focused on key technologies such as material science, chemical technologies, electronics, and telecommunications (Chapter IV). Companies, not government, funded and directed the substantial growth in research institutes that occurred in the 1980s. Encouraged by public policy, hundreds of private research institutes were established. The author of the case study notes that by 2004, over 10,000 private research institutes were operating in the Republic of Korea. These private research institutes are not the contract research organizations more familiar to the western OECD countries (such as Battelle). Rather, they are institutions adapted to the Republic of Korea’s system of innovation.

What is clear in the South Korean case is that the majority of R&D funds come from the private sector and are deployed in the private sector. This refl ects a dramatic change over the last 20 years, with the balance of funding moving from 50:50 in 1980 to 25:75 in 2003 across public and private sources, and the deployment of funds to the public research sector dropping from 49.4 per cent in 1980 to only 13.8 per cent in 2003. Moreover, total GERD increased from 0.58 per cent of GDP to 2.64 per cent over the same period. Instead of government or the leadership of the research base setting the objectives, the country’s industry exerted its leadership on the research agenda of these institutes and the wider innovation system: ‘As a result, industry took over the leading position in the national system of innovation from PRIs’ (Chapter IV).


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In parallel with these developments in the private sector, the government has launched programmes for the renewal and restructuring of PRIs and has developed new policy vehicles to meet the needs of the economy, such as the introduction in the 1990s of the ERCs (in science and engineering) based within the universities. Indeed, in the 1990s, the government sought to reduce the footprint of the PRIs in the national innovation system, culminating in a major structural reform of these institutions in 1998. This reform resulted in the reduction of the PRIs’ research capacity (Chung, 2001a). These changes were seen as necessary in light of the technological advancement of industry and the new capabilities of the country’s universities. The PRIs, which had played an important role in the rapid advancement of national science and technology in the 1960s, 1970s and 1980s, needed to adapt and adjust to the changed landscape; the government directed this process in 1999 by funding reforms inspired by other countries.

The role of the university

All three case countries show a similarity in the roles that the university sector traditionally assumed. Previously, the sector had concentrated on human resource development for science and technology, but was only marginally involved in research activities, with the exception of Poland where major universities have a longstanding tradition of fundamental research activities. Polish universities have extensive and proud histories, many of which go back centuries. Academics in the country have played an important role in the history of science and human understanding, going back to before the Renaissance. This patrimony cannot be ignored in understanding the role and position of universities in Poland today. Under central planning, universities were primarily responsible for training students to a high standard, while most research was undertaken by the Polish Academy of Science institutes (mostly basic and applied research) and branch R&D units (more applied, experimental, and design work). Since the transition towards a market economy began, universities have been reclaiming their prominent role in research, particularly in the fi eld of basic research. OECD and UNESCO data (Tables 1.3 and 1.4) now portray universities as important players in Poland’s national innovation system (certainly in terms of their share of funding and personnel); yet


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the case study describes a more muted role for universities in terms of research.

The case study enumerates 274 private and 126 public HEIs in Poland; of the public institutions, this number includes a variety of institutions, including universities (17), polytechnics (19), economic academies (5), state higher schools of vocational education (30), and many others (Chapter III). This sector attracted 31.6 per cent of GERD in 2005 (Table 1.3). It included nearly 58 per cent of all research personnel in 2003 (Table 1.4). Yet most research funding is absorbed by the polytechnics, universities, and medical academies (nearly 82 per cent of the total amount spent within the higher education sector in 2001; see Chapter III). As such, the number of HEIs active in research and technological development is actually 48, or 12 per cent of the total 400.

There is less policy concern that Polish academics are unable to work at the frontiers of science and technology. Rather, concern is concentrated on the perception that Polish academics are lacking in entrepreneurship and that Polish industry is ill-informed of the opportunities that collaboration with universities can offer. Kondratiuk-Nierodzinska and Olechnicka (Chapter III) describe a mismatch between fi rms and the research base in Poland: ‘Although Polish R&D institutions are characterized by having a relatively high technological potential and employ excellent specialists in many areas, they are not usually considered as worthy partners by enterprises because of their involvement in basic instead of applied research.’ This mismatch is reminiscent of the diffi culties faced by other EU Member States when their academic institutions are practically divorced from the needs and capabilities of local fi rms (for the comparative case of Portugal, see Goncalves, 1996).

Despite the apparent gulf between higher education and industry, some Polish universities have developed industrial liaison offi ces to help facilitate linkages with fi rms. The authors remark in the case study that initial contact usually emanates from fi rms and that cooperation agreements are initiated by individual entrepreneurs in contact with individual researchers: ‘The above-mentioned administrative units responsible for partnerships with the business sector are left out in the process’ (Chapter III). They argue that this is owing to bureaucracy within


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the HEIs in supporting academia–industry linkages and weaknesses in the legal position of the intellectual property rights (IPR) of state-funded research. A wider reading of the impact of industrial liaison offi ces and technology transfer from state-funded organizations confi rms that these are common problems in academia–industry relationships. What is striking is that fi rms and entrepreneurs are actively seeking and leading collaboration with academic researchers in Poland, and this stands somewhat at odds with the surveyed view that Polish industry is largely unaware of the potential opportunities in collaborating with the research base. This presumably implies that the absolute number of academia–industry collaborations is rather low, suggesting that both fi rms and HEIs need to further develop their capabilities before such linkages can be successful.

Since the 1990s, the governments of the Republic of Korea and China have started to focus on enhancing research capacity within the university sector. Both countries have created competitive programmes in science and technology that provide access for the universities to funding and scientifi c equipment. Such programmes have been accompanied with the strengthening of graduate training opportunities (such as through the Brain Korea 21 programmes). Until recently, the Republic of Korea concentrated on the development of R&D capabilities in a few selected universities in the Seoul area. However, more recently such opportunities have been extended to universities in less developed regions in order to enable them to play a more active role in regional development. China has concentrated its efforts on creating research capacity in a few selected universities, which are now major players in the Chinese innovation system. A return to Table 1.3 makes quite clear that traditions still tend to have an impact on the present situation. The higher education sector in Poland is substantially more active in the conduct of R&D than that of China, the Republic of Korea, or indeed, most OECD member countries.

In the Republic of Korea, universities were also given the central task of producing ever more qualifi ed students, particularly in engineering disciplines. Higher education made an important contribution to economic development in the Republic of Korea, as training the ‘talent’ improved the economy and provided channels for university–industry linkages through their role in fi rms. This is in


224


line with the view developed by Pavitt (2005) that technology transfer from universities is of value to fi rms but relatively rare, and takes place most often in the science-based industries (chemical, biotechnology, pharmaceuticals). Instead, he argues, [a]t the other extreme, the provision of trained researchers, familiar

with the latest research techniques and integrated in international research networks, is important to fi rms. It is ranked by many industrialists as the greatest benefi t provided by universities (Martin and Salter, 1996) (Pavitt, 2005, see also Salter and Martin, 2001).

This was clearly the dominant role for universities in the Republic of Korea until the 1990s, when, as noted in previous sections, the government initiated policies to help support research excellence in the higher education sector. Training and generating highly qualifi ed graduates was a key factor in the sequence of changes that transformed the national innovation system, as it provided the means by which fi rms could advance their own research and technological capabilities, as we will discuss in the following section. Although the higher education sector only captures 10 per cent of GERD (Table 1.3), this represents a modest increase over the share in 1990, which was 7.6 per cent (Chapter IV). By 2003, 20 per cent of all research personnel in the country worked in universities (Table 1.4). However, government policy towards the end of the century was still focused on maintaining balance in the national innovation system, and there was a view that too much intellectual capital was being retained in academia. To remedy this, policy concentrated on ‘relevant measures to ease the fl ow of researchers from academia to industry in order to strengthen the national innovation system’ (Chapter IV).

Chung argues that, until the 1990s, universities played a relatively minor role in the national innovation system. This has been echoed by other experts, who note that ‘[e]ven in more successful developing countries (e.g. Japan in the 1960s and 1970s and Korea in the 1980s), industrial fi rms (especially, large conglomerates) had a stronger research capacity than local universities’ (Eun et al., 2006). Policy changed to enhance the research profi le and capacity of universities. In 1994, the government enacted the fi rst comprehensive law for promoting R&D collaboration among universities, enterprises, PRIs, and foreign organizations. Chung concludes that this law has been instrumental in ‘activating’ research


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collaboration among national actors. This law not only provides a vehicle for joint research funding and spin-off companies, but also establishes mechanisms for exchange of personnel and joint training. However, this was not the only law to connect industry and academia, and has been followed with further measures on technology transfer and international collaboration. Nonetheless, the 1994 law marks a change in patterns of engagement in the national innovation system.

The higher education sector in China experienced rapid growth in the 1990s and since the turn of the century, with 20 per cent of a cohort now entering tertiary education as opposed to only 3.4 per cent in 1990. This growth was also matched with considerable restructuring and rationalization of institutions in terms of numbers, to provide larger, more comprehensive universities and ‘learning conglomerates’ (Chapter II). As in the Republic of Korea, government policy in China regarding higher education was primarily to ensure that universities were adequately training a growing number of qualifi ed graduates in the right subject areas. The Education Reform of 1985 is a milestone in the evolution of the higher education sector, which has accelerated since the second major reform in 1999. The 1985 reform brought about what Xue (2004, cited in Xue, 2006) calls the ‘3Ds and 3Cs’, that is, decentralization, depoliticization, diversities, commercialization, competition, and cooperation. Decentralization was primarily a transfer of authority from the centre to the regions and for some day-to-day managerial responsibilities, to the universities themselves. Overall, greater autonomy was granted in terms of what was taught, how universities competed for students, and how they engaged with industry.

However, universities still did not have strategic authority over their development in the medium to long term. This authority was provided with the 1999 reform, which was followed by radical restructuring and mergers across Chinese universities, seeking to achieve a desired scale and scope. While student enrolment in higher education had been growing for decades, it has exploded since 1999, with double-digit growth in applications annually (Xue, 2006).

Unfortunately, the expansion of the higher education sector has not been achieved with easy access to funds, and funding shortages in universities are common in China. As Xue and Zhou (Chapter II)


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describe, this poverty of resources has perhaps encouraged better linkages to develop between universities and fi rms, as they endeavour to fi nd additional sources of funds that can then be deployed according to the strategic aims of the university itself. The Education Reform of 1985 established mechanisms to encourage linkages between universities and industry, such as informal consulting, technology service contracts, joint research projects, science parks, and university-run enterprises. These linkages provided the means for universities to replace funds cut from their state budget, and have become important sources of funds to the universities today. As described earlier, university-run enterprises are an unusual institutional form that is nonetheless prevalent in China today. In the case study, the authors note that 4,563 such enterprises are currently operating, providing 1.75 billion yuan to universities as income in 2004 (Chapter II). The authors note the growing concerns about these enterprises and their ‘fi t’ with a university’s mission, not to mention the fi nancial risks involved. The government has now adopted a policy to encourage universities to ‘de-link’ and allow enterprises to adopt more appropriate organizational structures and governance.

Firms and industrial dynamics

Pavitt (2005) highlights two fundamentals of the nature of academia–industry linkages: (1) suffi cient and relevant absorptive capacities (Cohen and Levinthal, 1989; 1990) are necessary for any possible engagement; and (2) there are some areas of research where the potential for such linkages is greater than in others. This has been substantiated in the work of many other scholars (see, for example, Klevorick et al., 1995; Mansfi eld and Lee, 1996). In the three case studies, we have relatively little information on the innovative profi le of fi rms and their capabilities to engage in these linkages. However, across all three, we can draw the conclusion that innovative capabilities in fi rms are a necessary and likely requirement for the successful development of academia–industry linkages.15 Although these arguments are most easily demonstrated in market economies, the same core logic holds in planned economies. While a central planning authority can replace (to some extent) the

15. This is a necessary but not suffi cient requirement. Another prerequisite is clearly a research base that has suffi cient capacity and interest to engage in collaborative ventures.


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coordination requirements to support engagement between the research base and enterprises, the need for suffi cient and relevant absorptive capacities remains, and the proximity of knowledge bases in some fi elds (such as pharmaceuticals, biotechnology, and electronics16) holds equally for planned and market economies, due to the nature of science and technology and not socio-economic institutions per se. As Radosevic has explained with respect to Central and Eastern European economies: Under socialism, there was insuffi cient distinction between actual

research and other activities; research, production and services activities were often merged. The advantages of this were the development of close contacts and shared knowledge through long-term cooperation (Meske, 1994). However, this institutional advantage was undermined by a lack of economic incentives. Under economic pressure, present especially during the 1980s, servicing production squeezed out much of the real research (Radosevic, 1998).

Absorptive capacity (Cohen and Levinthal, 1989; 1990) in industry is a prerequisite for successful collaborative ventures between academia and business, and a necessary condition for turning the absorption of knowledge into innovation. Cohen and Levinthal (1990) defi ne it as the ability of a fi rm to recognize the value of new external information, to assimilate it, and to apply it to a commercial end. They go on to argue that such capacity is largely a function of the fi rm’s level of prior related knowledge, which may have been developed through R&D activities and through staff research skills. R&D and more general innovation capabilities have developed to a far greater degree in fi rms in the Republic of Korea than in Poland or China. A Community Innovation Survey in Poland recorded that only a minority of enterprises (6.7 per cent) were engaged in R&D activities in the years 1998 to 2000. In China, enterprises’ lack of research capacity is currently seen as one of the major obstacles in the capacity to absorb knowledge leading to innovation.

Of the three, the case study on the Republic of Korea suggests that innovation capability development in fi rms precedes research collaboration. The 1970s and early 1980s were a time for industry to develop internal R&D capabilities with support from PRIs, which were

16. See Klevorick et al. (1995) for a comprehensive and empirically supported review of the technological differences between sectors.


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directed to develop applied research projects for the benefi t of industrial development. This policy found success: Chung concludes, ‘Korea could formulate a national innovation system in the 1980s because industrial companies started to increase their R&D and innovation capabilities’ (Chapter IV). He also notes that this level of internal capacity was necessary before fi rms could interact with other innovation actors. In the Republic of Korea, using several policy instruments and incentive measures, the government has motivated industrial enterprises to establish their own R&D institutes in the fi eld of high technology, with their number rising from 53 in 1981 to 966 in 1990.

Either by design or by fortunate coincidence (or simply better educated employees), successive South Korean governments sequenced policy to help fi rms to suffi ciently develop their innovation capabilities in order to benefi t from academia–industry linkages. These policies included direct fi nancial support to R&D, measures to promote industry consortia, and the provision of qualifi ed staff for hire.

The innovative profi le of fi rms in the other two case studies can be contrasted with the South Korean case. Indeed, public (or newly privatized) enterprises in Poland and China are undergoing major reorganization to increase their productivity and competitiveness. In Poland, an impressive number of programmes are accessible to enterprises in general, and in particular to the SME sector, to support them in their restructuring process. However, when enterprises are thrown into the market economy and struggling for survival, the development of R&D capacity is frequently not the priority in the short term. In China, state-owned enterprises are not research-intensive, but foreign direct investment has led to the creation of private enterprises that do have an R&D capacity and seek locally produced innovation.

The situation in China seems to be similar to that of the Republic of Korea in terms of the active capacity development of fi rms through their own means and through government policy. This is perhaps limited by the difference in governance regimes between state-owned and private-sector fi rms, but the open model for innovation seems to be in greater evidence in industry and favoured by policy-makers. However, experts have cast doubt on any generalizations arising from such success stories:


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On the basis of current trends, it is unlikely that many Chinese companies will develop R&D capabilities in support of novel, science-based technologies in the near term. China’s more entrepreneurial high-technology companies often lack resources to support their own R&D. Larger state-owned enterprises often fi nd that short-term business objectives are better met by the less risky course of procuring advanced technology from abroad (Suttmeier, Cao, and Simon, 2006).

Polish fi rms are reported to be very weak in their innovative profi le in the case study. We have already pointed out that the third Community Innovation Survey (1998–2000) recorded only 6.7 per cent of fi rms as engaged in R&D (Chapter III). This is not entirely surprising, given the earlier note that 95.2 per cent of all enterprises are micro-fi rms (employing nine or fewer people). There are minimum-scale thresholds of activity before R&D budgets will be defi ned, and in some sectors R&D budgets are not very good indicators of innovative activity. However, despite the limitations of statistics and innovation metrics, we can understand from the case study that Polish industry is generally in a relatively weak state and private industry still in an embryonic phase. This raises important questions about the capabilities (absorptive capacities) of Polish fi rms to engage in academia–industry linkages and the relevance of this sort of policy at this stage of the economy’s development. Moreover, it raises questions about policy concerns over the role for external sources of innovation and the functional role of a more open model of innovation. The authors warn that ‘[t]he existence of the “technological gap” becomes more evident when we take into account the considerable interest of Polish enterprises in purchasing foreign technologies. [The] innovativeness of [the] Polish economy becomes more and more dependant on imported patents, licenses, know-how and technologies’ (Chapter III). Perhaps, as in the case of the Republic of Korea, the appropriate policy approach might be to help fi rms in the ‘digestion and imitation of imported technologies from advanced countries’ (Chapter IV) in order to help them to develop their internal innovation capacities.

The arguments put forth here and introduced in the quote by Pavitt are not new to the international discussion of academia–industry linkages. The innovative capabilities of fi rms must be a priority for policy-makers. In an OECD review of academia–industry linkages


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(referred to in this monograph as ‘industry–science relationships’), Guinet concludes that: In broad terms, the main challenge for the fi rst group of countries, those

with below-average R&D intensity, is to increase the technological absorption capacity of fi rms and thus shift a greater proportion of R&D activity to the private sector. Countries in the second and third groups must seek to improve [industry–science relationships] with the overriding goals of reducing unnecessary duplication of innovation investment and improving the responsiveness of the public sector to the needs of industry. In the last category, the overriding concern is to cultivate excellence in university research and increase the leverage of the relatively low level of public investment in research (Guinet, 2002: 34).

Legal frameworks and incentives

Each of the case studies devotes detailed attention to the evolution of legislation in support of academia–industry linkages. Certainly, institutional rules are essential for such linkages to develop. The laws introduced establish incentives and disincentives for collaboration, and the usual suspects are noted for frustrating collaboration. These suspects include the terms upon which state-funded research can be made proprietary (by a fi rm or a researcher). When terms are too tight,17 collaboration can be blocked as fi rms and individual researchers gain less in the process; when they are too loose, critics can argue that the state is de facto subsidizing private enterprise. Likewise, the formalization of collaboration can go so far as to eliminate the important informal contacts that researchers have with fi rms. These issues have been widely debated in the OECD countries, particularly in the USA with respect to the Bayh–Dole Act, through which the rights for the exploitation of intellectual property arising from federally funded research were transferred to US universities. The case studies describe very consistent issues and legal points. This consistency points to some international convergence, particularly on IPR.

17. Or too long-lived. Consider how long a fi rm should pay royalties on a core technology that is subsequently redesigned, advanced, and even superseded. This is a common problem in the fi eld of software development.


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In addition to the wider legal framework, the case studies describe specifi c laws and policy initiatives to help foster academia–industry linkages. Most of these target universities and research institutes, rather than fi rms, and the general trend is to ‘free the hands’ of universities and research institutes to respond more effectively to the opportunities to work with fi rms, in the private or public sector, local or international. We can organize these initiatives into three groups:

1. initiatives and institutions aimed at strengthening participants, 2. initiatives and institutions aimed at encouraging linkages,3. initiatives and institutions aimed at supporting science and

technology in general.

Developing potential collaborators

It may seem too obvious to emphasize, but quality and resources matter when it comes to establishing a collaborative relationship between organizations and individuals. Certainly, other studies have found that higher-quality academics attract more industrial interest, particularly in the basic sciences (Mansfi eld and Lee, 1996). As we have described above, the academic landscape (universities and research institutes) differed considerably in Poland, the Republic of Korea, and China over the period of analysis. However, policy-makers in all three countries were using bibliometric and patent data to try to carry out some benchmarking of the quality of academia in their countries. Moreover, policies have been launched that aim to strengthen these institutions and direct them more towards industry. In the Republic of Korea and China, policy and investments focused on institution-building in the university sector and technological development in industry. In Poland, policy in research funding highlighted the importance of peer review and the goal to foster industrially relevant research.

Industrial policy was an important driver of the wider policies on science and technology in the Republic of Korea, and this was evident from the 1960s, as described in the case study. Indeed, we could refl ect on the early framing of science and technology as instrumental goals in the growth and development of national industry and society. The early stages of science and technology policy in the 1960s and 1970s focused on building technological capabilities in fi rms through supported R&D


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and through the rapid expansion of teaching programmes to develop qualifi ed scientists and engineers for industry. As many parts of South Korean industry have closed the technological gap with their competitors in the main OECD markets, government’s policy horizon has focused on singular initiatives related to key technologies, coordination across the different organizations and institutions supporting innovation, and the rebalancing of major actors’ roles and capabilities. One example of this approach has been the promotion of scientifi c research within universities (e.g the Centres of Excellence and Korea Brain 21 programmes) as well as the repositioning of the PRIs in scale and scope. This rebalancing has also taken on a regional dimension through the placement of research centres throughout the country. The Offi ce of Science and Technology has been given a high position in government in the Republic of Korea (headed by the Deputy Prime Minister), signalling the core role that policy-makers accord to science and research in the country’s wider economic and social development.

This instrumentality (where science and technology policy is formulated as a means of advancing industrial policy) is less in evidence in the industrial policies of post-transition Poland. There are quite a few policy initiatives in place to support the innovative potential of Polish fi rms, such as the national network of innovation centres similar to EU Innovation Relay Centres (as described in Table 5.1). Moreover, direct fi nancial intervention is provided to support new technology-based fi rms and other entrepreneurial ventures through initiatives such as ‘Capital for Entrepreneurs’, softer loan and credit terms (via EU structural funds), and the fostering of a seed and venture capital market for Polish enterprise (Chapter III). These initiatives may be instrumental in developing the absorptive capacity of Polish fi rms, together with the programmes to support collaborative R&D discussed above. Through the European Framework programme, universities are further expanding and developing their research capacities, in particular with the creation of Centres of Competence and Centres of Excellence. However, as described in the case study, this industrial policy is not woven together with science and technology policy, but rather appears to stand alone, with links to other related areas of policy. We see this organizationally in the location of policy responsibilities and the challenge of the Department of Innovation in the Ministry of Economy and Labour


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(MGiP) to ‘unoffi cially play the role of an intermediary between the departments of different ministries responsible for formulation of innovation policy’ (Chapter III).

In China, both industrial policy and science and technology policy are elements of a wider strategic plan for the economic growth of the country. The government’s medium and long-range science and technology plan aims to reduce the knowledge gaps between China’s science and technology community and that of the rest of the world, and to encourage indigenous innovation (Chapter II). The case study authors present the ‘three-tier’ science and technology development strategy, in which the fi rst tier is the ‘main battlefi eld’, where two-thirds of all science and technology capabilities and resources are mobilized with the goal of economic development. The second and third tiers relate to frontier areas of technology (second tier) and science (third and smallest tier). Although the case study provides less discussion on Chinese enterprises, the authors do describe very weak industrial R&D capability, as captured in a 1996 innovation survey (Chapter II). By 1998, however, China ranked thirteenth in terms of technological competitiveness in the IMD World Competitiveness Yearbook, a jump from its twenty-eighth place in 1996 (Chapter II). As many have argued, R&D capacity is an imprecise proxy for innovation and technological development across fi rm sectors and sizes. We can therefore conclude that Chinese fi rms are fast developing technological capabilities, although that pattern may be uneven in terms of region, sectors, and size. To specifi cally support SMEs, the government introduced an innovation fund for small technology fi rms (Innofund) in 1999. Since 1985, government policy with respect to research institutes and universities has been a reversal of the ‘iron rice bowl’ policy that previously assured researchers of employment. The trend in funding policy has been to replace entitlement with the opportunity to win funding through research projects and technology contracts. With this ‘stick’ came the advantageous framework for universities to be able to use extra-budgetary funds fl exibly. As the case study presents, the funds from technology contracts and university enterprises are substantial. In addition to local funds, the central government has invested steadily in the Key Laboratory Programme (for basic research) and central funding bodies, such as the National Natural Science Foundation of China (again, primarily for basic research) since


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the mid-1980s. The case study also highlights the important impact of the Knowledge Innovation Programme (described earlier), which was a reform and funding programme targeted at the research institutes of CAS, with a view to repositioning these institutes as internationally leading centres for research with clear relevance to industry engaged in high-technology development (Chapter II).

Encouraging linkages

All three governments have sought to encourage academia–industry links through legal frameworks and direct policy intervention. Poland has established a number of initiatives and institutions to encourage exchange between industry and the research base. Table 5.1 displays many of these initiatives, such as the Technology Transfer Centres, Regional Centres of Patent Information, Centres of Excellence, and National Network for Innovation. Pilot funding is available at some universities for the launching of incubators. As discussed earlier in this review, the principal policy measure to support collaboration in Poland has been research funding, namely of targeted projects.

The Government of the Republic of Korea has provided direct fi nancial support and incentives to encourage linkages and collaborative research between fi rms and the research base. However, Chung notes that these measures only became truly relevant after fi rms had amassed suffi cient technological capabilities to be able to engage profi tably in such activities. As the South Korean case study notes, further detailed laws were then established to encourage collaboration in R&D, specifi cally the 1986 Law for Promoting Industrial Technology Research Consortia and the 1994 Law for Accelerating Collaborative R&D. The fi rst of these laws provided a means for SMEs to obtain fi nancial support from the government by joining their efforts, collaborating on large-scale R&D projects collectively. The second of these laws provided the method and means for multimodal forms of collaborative exchange, including the exchange of R&D personnel and joint use of facilities and data, as well as collaborative R&D fi nance (Chapter IV). This case study was the only one of the three to describe a policy for the mobility of staff between academia and industry. These initiatives have demonstrated great potential in other OECD countries (such as the Teaching Company Scheme and Knowledge Transfer


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Partnerships in the UK), as well as in the developing world. In the 1990s, regional innovation policies were also developed to encourage this collaboration across the Republic of Korea, through science parks and regional innovation centres.

Policies to encourage transfer between the research base and enterprise have been a core part of the restructuring of science and technology in China since the mid-1980s. Indeed, the objective to foster technology transfer and deeper engagement was one of the drivers for reforms in funding and of the structure of PRIs and universities. The Torch Programme was also launched in 1988 to commercialize research results and new (close-to-market) technologies emerging from the research base, and to develop new and high-technology industries in China (Chapter II). This programme has been highly successful in establishing 53 high-tech industrial development zones. The 863 Programme (High-Tech Research and Development) also included an element for the commercialization of R&D results to benefi t industrial development. The impact of these programmes is less clear in terms of enhanced academia–industry engagement, but research outputs (publications and patents) are worthy of notice.

Creating a fl exible environment to support science and technology

Legislation is essential for creating a favourable legal and institutional framework for science and technology, and in particular for academia–industry linkages. As described earlier, all three countries have instigated major policy initiatives to better support science, technology, and innovation. Many of these major steps in policy are encapsulated in law, such as the 1967 Science and Technology Promotion Act in the Republic of Korea and the Law of 8 October 2004 in Poland (which sets out a broad range of new initiatives).

Legislation has also been established with regard to the protection and use of IPR by researchers or universities. Chinese patent law was established in 1985, with subsequent amendments in 1992 and 2000. The Patent Offi ce was created in 1980 to protect intellectual property and encourage invention and creation, and transformed into the State Intellectual Property Offi ce under the State Council Law on Promoting the Transformation of Scientifi c and Technological Achievements (1996).


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Of course, these laws and institutions are only as effective as their system of governance and enforcement and, as the case study clearly states, this has been a source of debate and dispute affecting particular companies and markets in China. Poland’s intellectual property institutions are much older, as the Patent Offi ce was established in 1918. In addition, Regional Centres of Patent Information have recently been created. In the Republic of Korea, the Patent Law was established in 1946 and amended over time, although the governance and active promotion of IPR regimes only found relevance with the growing sophistication of industry (Chapter IV). As Chung notes, the Patent Law has no direct prescription that is related to R&D collaboration. However, it has provided a robust framework for scientists, engineers, and enterprises to employ during R&D activities (Chapter IV). Chung helpfully distinguishes between what IPR can do for academia–industry linkages and what they cannot. In brief, such rights and legislation establish basic conditions for return on investment and control of intellectual property to provide the primary incentives for undertaking research and technological development in some areas of science and industry. As many have described, patents are not always useful mechanisms of control and return on investment as they require detailed disclosure and enforcement.

However, the case studies also describe, ‘in the margins’, a different aspect of the institutional environment that brings us back to our initial characterization of innovation policy-making in China (planning), the Republic of Korea (orchestration), and Poland (substitution). This aspect is the presence of trust and expectations. Because innovation actors in the Republic of Korea expect that the government will successfully bring about announced policy measures, the actors contribute accordingly and the policy-maker can effectively ‘orchestrate’. Behind this institutional coordination lie decades of experience to support this view and, more importantly, industrial and social networks that make it happen. In China, the continued dominant role of the state ensures that planning approaches are still the most effective means of achieving policy objectives. In contrast, Poland refl ects a more turbulent situation in which the actors and rules change frequently. Encouraging Polish fi rms to take advantage of innovation support measures (including academia–industry linkages) may require more than granting industry access to funding, to trustworthy information, and to government


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policy expectations, which are at a premium with Polish fi rms and entrepreneurs. While this is a challenging state of affairs, it is certainly not unique to Poland. Policy-makers should be more attentive to the roles of trust and expectations in national innovation systems, in addition to legal frameworks.

5.2 Lessons for academia–industry linkages in developing economies: the search for the Triple Helix

The objective of this study has been to explore the role of government and its modes of intervention in the enhancement of academia–industry partnerships in China, the Republic of Korea, and Poland. It could be demonstrated that these countries represent an interesting variety of evolving roles played by the government in the regulation of the economic system in general, and science and technology policies in particular. Our analysis of the three case studies brought about a somewhat new characterization of roles that can be called planning, orchestration, and substitution. We therefore suggest moving away from the more conventional concepts of facilitation and regulation.

Whatever approach is chosen, in all three cases, the role of the state in setting up the national innovation system and enhancing academia–industry linkages has been very strong, and government intervention differs more in the approach chosen than in the intensity of the intervention. While it is not easy to establish a direct relationship between the type of government intervention and the effectiveness of the national innovation system, one may conclude at the least that the approach in the Republic of Korea has been appropriate for the national context because it has led to an innovation system that now well supports national economic development.

It is generally assumed that it is a good thing for academia and industry to engage together directly for the benefi t of the wider community. The comparative analysis of the role played by the state in the case studies has, however, also shown that the potential impact of this policy can be limited by the motivations and capabilities of academia and industry, as well as by the socio-economic environment and policy frameworks in which they occur. Each of our three case


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studies has demonstrated this core dynamic in the development of academia–industry linkages.

Unavoidably, capabilities – to innovate, collaborate, and coordinate – drive the process and thus need to inform policy intervention. Moreover, there is a sequence that requires academia and industry to collaborate as equals, if they are to collaborate at all in the medium and long term. By ‘equals’, we certainly do not mean that they should have the same capabilities or resources. Rather, we mean that they should have the capacity to understand the problems and principles that each other faces (this is very much a function of the educational attainment of employees in fi rms). Their differences in research capacity and resources provide the basis for mutually profi table exchange. This potential for collaboration, however, will not be met unless both sides can perceive the value in engagement, identify and develop opportunities for collaboration, and muster the capabilities to engage in it. Academia–industry linkages are not immediate in their value; nor are they automatic in their benefi ts. Actors must separately develop certain levels of capability that provide the basis for these linkages to develop. Each of the three case studies refl ects these points in the contexts they describe, and we will review how the three countries have accumulated the capabilities needed for academia–industry engagement through the summary presented in Figure 5.1.

In Figure 5.1, we graphically present a summary view of each of the three country case studies in terms of the capabilities needed for academia–industry engagement. The fi gure is based on the case study narratives, and reviews the progress of academia–industry engagement in terms of three dimensions: fi rms, the research base, and the supporting environment. We suggest that progress in academia–industry engagement proceeds through three key stages:

1. mutual perception of the value of academia–industry interactions,2. identifi cation and development of opportunities for collaboration, 3. development of capabilities to successfully engage in academia–

industry collaboration and to leverage better results through collaborative work.


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Figure 5.1 Capabilities for academia–industry engagement

Each of the three dimensions refl ects an internal dynamic that determines the stage of development at any point in time. As our case studies reveal, greater scope for academia–industry engagement comes with an advancement of technological and innovation capabilities in fi rms. The internal dynamic for this process in the research base is more dependent on researchers’ interest in collaborating with industry (and the incentives for doing so). Researchers’ capabilities to interface productively and collaborate with fi rms also play a key role in the process. Finally, potential partners in academia–industry engagement require that governments establish an encouraging environment that provides fl exible institutional systems which allow multiple paths for innovation. The institutional systems are the socio-economic environment and the room for innovation granted within fi rms and academic organizations to entrepreneurs. Flexibility implies that variety is supported within the political and legal framework, and that actors have suffi cient autonomy to choose to innovate and collaborate. Flexibility also suggests that there is some stability in the economic and legal system to limit risks and uncertainty.


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This analysis is a broad characterization based on the case studies. However, the points raised earlier in this summary review of the three countries can be found in Figure 5.1. Of the three countries, the Republic of Korea appears to be at a stage where academia–industry linkages can have a real impact on the innovation profi le of the country as a whole. However, national universities are still catching up with the capabilities in research collaboration established in fi rms and research institutes. In Poland, most fi rms have yet to develop the absorptive capacities and internal innovation capabilities required to engage effectively in academia–industry linkages. This may be because many fi rms are undergoing a restructuring process that is more of a priority for the moment than their developmental activities. Moreover, universities also appear to need to be persuaded of the value of academia–industry engagement, and require additional capabilities for the development of opportunities for collaboration. In China, universities and research institutes are the most adept at creating opportunities and capabilities for collaboration because of their fi nancial need; however, the environment must become more fl exible to really provide room for entrepreneurs, and novel research is needed to explore these collaborative relationships to their greatest potential. The authors also stress that industrial R&D capabilities are developing rapidly, thus raising expectations for collaboration in science and technology (Chapter II).

This comparative study sends a clear message to policy-makers that they have an important role to play in academia–industry linkages, but that such linkages are not a means for bootstrapping development. They are engagements of a higher order, rooted in ‘deep’ innovation systems, where institutions and organizations have developed both the motivation and means to engage.

With this cautionary note, we return again to the ideal of the Triple Helix – that interwoven network of relationships among academia (including universities and research institutions under this label), industrial fi rms, and government. Our case studies have demonstrated that to attain the Triple Helix in a national system of innovation, it is imperative for each of the actors involved to have a level of capability suffi cient to enable them to engage effectively. In the case of fi rms, we have already discussed the importance of innovation and absorptive capacity. In the case of academia, universities and research institutions


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must have research capacity as well as the motivation and capability to collaborate with industry. It is often the latter of these features that proves to be lacking among academia. Finally, the government must be capable of gauging the opportunities and needs of both academia and industry to collaborate, design and deploy policy while encouraging both sides actively to identify and develop joint R&D activities.

Fortunately, a considerable body of research exists, which explores the modes and mechanisms by which academia–industry linkages occur (Laursen and Salter, 2004; Hicks and Katz, 1996; Jaffe, 1989; Mowery et al., 2001; Owen-Smith et al., 2002; Etzkowitz and Leydesdorff, 2000; Mowery and Sampat, 2004a; Mansfi eld, 1991). Research has considered whether sectoral patterns defi ne the potential for academia–industry linkages (see, for example, Cohen, Nelson, and Walsh, 2002; Klevorick et al., 1995). There is evidence that in some sectors, such as the life sciences and electronics, the relationship between academia and industry is much closer. Other research has debated whether the size of the fi rm also governs the importance and impact of academia–industry linkages. Further research has considered the impact of incentive structures and IPR (see for example, Hicks and Katz, 1996; Mowery and Sampat, 2004a). More recently, and with reference to the idea of ‘open innovation community’ (Chesbrough, 2003; Chesbrough, Van Haverbeke, and West, 2006), scholars have explored the nature of fi rms that engage with academia as part of their wider search processes for innovation (Laursen and Salter, 2004). The cautionary note sounded in this research is that policy-makers cannot simply ‘transplant’ policies from one system to another, as the nature and structure of institutions vary considerably. Moreover, we should be circumspect in exploring how policies will affect behaviour, by fi rst giving greater attention to the nature of existing institutions.

The challenge of our research was to explore how governments can best support academia–industry linkages. Our review has shown that, independently of the political system, in all three cases the government has played and is playing an active and rather interventionist role in both policy-making and setting out institutional frameworks and incentives. We can therefore reframe the question in the following manner: ‘Should a government plan, substitute, or orchestrate to achieve improved academia–industry linkages?’


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The South Korean approach appears to be the most successful of the three to date in generating real R&D collaboration between industry and the research base. Policy-makers developed ready partners for collaboration by simultaneously developing research and engineering capacities in PRIs and industry, and by feeding both with new talent from the universities. It should, however, also be noted that this approach requires signifi cant infl uence (even control) over fi rms, substantial funds for investment, a ready source of engineering and science students, and a research base that is focused on the priority of collaboration for the country’s technological development.

The institutions and circumstances that emerged for the Republic of Korea in the latter half of the twentieth century are not likely to be repeated in other countries. However, we do see some similarity in the policy approaches of the Chinese Government, although the institutions and general market conditions are very different. Both governments have focused on developing technological capabilities in fi rms, although the starting points for South Korean fi rms in the 1960s and 1970s and Chinese fi rms in the 1990s were very different. Likewise, the research base in China is also given priority in the country’s technological and economic development. In Poland, the South Korean approach may have little traction, as fi rms would probably not easily be directed by the central government, and the research base (in particular the university sector) is now anxious to chart its own course. However, ‘priming the pump’ by using public funding to stand in for greater fi rm investment in R&D and innovation is not a solution, even in the short term. Where weak demand for innovation is the key obstacle to more R&D activity, the situation cannot be remedied by increasing public R&D spending when there is little demand for innovation from the business sector (Radosevic, 2004).

What we learn from these case studies is that governments can refi ne policy measures and targets to encourage academia–industry linkages insofar as these are possible and desirable as innovation goals for the national innovation system at its current stage of development. The South Korean case study has demonstrated that it is important to sequence policy intervention in order to bring all actors (universities, research institutions, and fi rms) up to a ready stage of engagement. Moreover, it also demonstrates that the actors’ roles in that system


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change as the elements of the system (including the actors themselves) change, and that the policy framework for collaboration must therefore change, too.

This comparative analysis comes to the fi nal conclusion that any search for the Triple Helix must begin with countries taking stock of their innovation systems (both national and regional) in order to fi rst determine the governmental role in said search for the Triple Helix. Once this has been done, the next step is to establish whether innovation actors perceive the need for interaction, whether they can identify opportunities, and whether they have the capabilities to interact. From this basic diagnosis of the situation, governmental intervention must be defi ned in a targeted and sequenced fashion. Using the ‘capabilities for academia–industry engagement’ scheme illustrated in Figure 5.1, policy-makers can refl ect on how these key dimensions – industry, the research base, and enabling environment – are currently placed to develop and benefi t from academia–industry linkages. A better understanding of all innovation actors in addition to fostering their interaction is the means to attaining the elusive Triple Helix.


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OTHER TITLES ON EXTERNAL QUALITY ASSURANCE AND NEW TRENDS IN HIGHER EDUCATION

Accreditation in the United States: Origins, developments and future prospects

Elaine El-KhawasExternal quality assurance in Indian higher education: Case study

of the National Assessment and Accreditation Council (NAAC) Antony StellaThe national accreditation system in Colombia: Experiences

from the National Council of Accreditation (CNA) José Revelo Revelo, Carlos Augusto HernándezIn pursuit of continuing quality in higher education through

accreditation: The Philippine experience Adriana A. ArceloAccreditation in the higher-education system in Hungary:

A case study for international comparison Tamás KozmaReforming higher education in the Nordic countries: Studies

of change in Denmark, Finland, Iceland, Norway and Sweden Ingemar Fägerlind, Görel StrömqvistPrivate higher education in Georgia George SharvashidzePrivate higher education in Kenya N.V. Varghese (Ed.), Okwach Abagi, Juliana Nzomo,

Wycliffe OtienoEntrepreneurialism and the transformation of Russian universities Michael Shattock (Ed.), Evgeni Kniazev, Nikolay Pelikhov,

Aljona Sandgren, Nikolai ToivonenCross-border higher education: Regulation, quality assurance and

impact (2 vols) Michaela Martin (Ed.)External quality assurance: Options for higher education managers Set of IIEP training modules


External quality assurance in higher education: Making choices Michaela Martin, Antony StellaGlobalization, economic crisis and national strategies

for higher education development (e-publication) N.V. VargheseInstitutional restructuring in higher education within

the Commonwealth of Independent States (e-publication) N.V. VargheseAccreditation and the global higher education market Gudmund Hernes, Michaela MartinGlobalization of higher education and cross-border student mobility

(e-publication) N.V. VargheseExternal quality assurance of higher education in anglophone Africa Michaela Martin, Jimena Pereyra, Antony Stella, Mala SinghPrivate higher education in Bangladesh (e-publication) Mahmudul Alam, M. Shamsul Haque, Syed Fahad SiddiqueGATS and higher education: The need for regulatory policies

(e-publication) N.V. VargheseExternal quality assurance: options for higher education management Michaela Martin, Antony StellaGrowth and expansion of private higher education in Africa N.V. VarghesePrivate higher education N.V. VargheseEvaluating higher education Jeanne Lamoure RontopoulouEquity and quality assurance – A marriage of two minds Michaela Martin (Ed.)Higher education reforms – Institutional restructuring in Asia Edited by N.V. VargheseRunning to stand still: Higher education in a period of global

economic crisis (e-publication) N.V. Varghese


Globalization and cross-border education: Challenges for the development of higher education in Commonwealth countries (e-publication)

N.V. VargheseTrends in diversifi cation of post-secondary education (e-publication) N.V. Varghese, Vitus Püttmann


IIEP publications and documents

More than 1,500 titles on all aspects of educational planning have been published by the International Institute for Educational Planning. A comprehensive catalogue is available in the following subject categories:

Educational planning and global issuesGeneral studies – global/developmental issues

Administration and management of educationDecentralization – participation – distance education – school mapping – teachers

Economics of educationCosts and fi nancing – employment – international cooperation

Quality of educationEvaluation – innovation – supervision

Different levels of formal educationPrimary to higher education

Alternative strategies for educationLifelong education – non-formal education – disadvantaged groups – gender education

Copies of the Catalogue may be obtained on request from:IIEP, Communication and Publications Unit

[email protected] Titles of new publications and abstracts may be consulted

at the following website: www.iiep.unesco.org


mailto:[email protected]


The International Institute for Educational Planning

The International Institute for Educational Planning (IIEP) is an international centre for advanced training and research in the fi eld of educational planning. It was established by UNESCO in 1963 and is fi nanced by UNESCO and by voluntary contributions from Member States. In recent years the following Member States have provided voluntary contributions to the Institute: Australia, Denmark, India, Ireland, Netherlands, Norway, Spain, Sweden, and Switzerland.

The Institute’s aim is to contribute to the development of education throughout the world, by expanding both knowledge and the supply of competent professionals in the fi eld of educational planning. In this endeavour the Institute cooperates with training and research organizations in Member States. The IIEP Governing Board, which approves the Institute’s programme and budget, consists of a maximum of eight elected members and four members designated by the United Nations Organization and certain of its specialized agencies and institutes.

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Designated Members: Christine Evans-Klock Director, ILO Skills and Employability Department, Geneva, Switzerland. Carlos Lopes Assistant Secretary-General and Executive Director, United Nations Institute

for Training and Research (UNITAR), United Nations, New York, USA.Jamil Salmi Education Sector Manager, World Bank Institute, Washington DC, USA.Guillermo Sunkel Social Affairs Offi cer (ECLAC), Social Development Division, Santiago, Chile.

Elected Members:Aziza Bennani (Morocco) Ambassador and Permanent Delegate of Morocco to UNESCO. Nina Yefi movna Borevskaya (Russia) Chief Researcher and Project Head, Institute of Far Eastern Studies, Moscow.Birger Fredriksen (Norway) Consultant on Education Development for the World Bank.Ricardo Henriques (Brazil) Special Adviser of the President, National Economic and Social Development Bank. Takyiwaa Manuh (Ghana) Professor, Former Director of the Institute of African Studies, University of Ghana.Jean-Jacques Paul (France) Professor of Economics of Education, Department of Economics and Business

Administration, University of Bourgogne, Dijon.Zhang Xinsheng (China) Vice-Minister of Education, China.

Inquiries about the Institute should be addressed to:The Offi ce of the Director, International Institute for Educational Planning,

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Within the context of knowledge economies, academia–industry partnerships have moved high on the policy agenda of many countries. There is now a clear perception that governments have a strong role to play in the development and support of national

innovation systems, of which academia–industry partnerships are a crucial element. Governments can create a friendly environment for interaction and innovation, but the potential for fruitful interaction also largely depends on the individual capabilities of each innovation actor.

This IIEP publication explores the roles and modes of government intervention in the enhancement of academia–industry partnerships in three countries – China, Poland, and the Republic of Korea. These countries form contrasting cases along the state–market continuum. They also represent an interesting variety of roles played by governments in the regulation of R&D policies and academia–industry linkages. The book identifies three major approaches used by these countries for the support of academia–industry partnerships – orchestration, planning and substitution.

The Editor

Michaela Martin is a Programme Specialist at the International Institute for Education Planning (IIEP-UNESCO), Paris, where she is in charge of research and training activities in the area of higher education policy and planning. Since 2000, she has been in charge of IIEP’s research on academia–industry partnerships.

ISBN: 978 -92-803-1323-9


Documents

In search of the Triple Helix - UNESCOunesdoc.unesco.org/images/0019/001937/193750E.pdf · In search of the Triple Helix in China, ... GERD gross domestic expenditure on R&D ... NCP