Measuring National Systems of Innovation – The „Innovation ...ec.europa.eu/economy_finance/events/2009/20091120/... · Microsoft PowerPoint - IDE_ECFIN_v08_to_ECFIN_cvh_20112009

Measuring National Systems of Innovation –The „Innovation Indicator“ECFIN „Building a Systemic Approach“

Brussels, 20 Nov. 2009

Prof. Dr. Christian von HirschhausenDIW Berlin / TU Berlin

and Team IDE

gerdami

Copyright rests with the author

• Composite Indicators• The „Innovation Indicator Germany“• Results 2009 and Comparisons• Conclusions

3

What is a Composite Indicator?

Composite indicators are based on sub-indicators with a

standardized unit of measurement, and are based upon a

subjective way of weighting these sub-indicators.• Composite indicators, which compare country performance, are

increasingly used as a tool in policy analysis.• CI´s provide simple comparisons of countries that can be used to

illustrate complex and sometimes elusive issues in wide-ranging fields, e.g., environment or economy

4

Pros and Cons of Composite Indicators

• Used to summarise complex or multi-dimensional issues • Can help attracting public interest by providing a summary figure with which to compare the performance across Countries and their progress over time• Could help to reduce the size of a list of indicators or to include more information within the existing size limit• Are easier to interpret than a battery of many separate indicators• Enable users to compare complex dimensions effectively

Pros

• May send misleading, non-robust policy messages if they are poorly constructed or misinterpreted

• There could be more scope for Member States about composite indicators than on individual indicators. The selection of sub-indicators and weights could be the target of political challenge• The composite indicators increase the quantity of data needed because data are required for all the sub-indicators and for a statistically significant analysis

Cons

5

Construction of Composite Indicators• Theoretical framework: provides the basis for the selection and

combination of single indicators • Data selection: on the basis of analytical soundness, measurability,

country coverage, relevance to the phenomenon being measured andrelationship to each

• Imputation of missing data: is needed in order to provide a complete dataset

• Multivariate analysis: should investigate the overall structure of the indicators and explain the methodological choices, e.g. weighting and aggregation

• Normalization: to render the indicators comparable• Weighting and aggregation: should be done according to the

underlying framework• Robustness and sensitivity: should be undertaken to assess the

robustness of the composite indicator• Presentation and Visualisation: the way of presenting can influence

the interpretation

6

Quality of a Composite Indicator

The quality of a composite indicator as well as the soundness of themessage depends primarily on the quality of the framework and the dataused.

The „key“ to any useful application of indicators is transparency, and a scientifically sound, objective approach

Relative results and „information „ are more important than concreteresults and positions

Disputable policy messages can be the result of a composite indicatorwhich is based on a weak theoretical background or a dataset containinglarge measurement errors

7

Examples of Composite Indicators• There are currently more than 300 composite indicators developed by

international organizations• Classification of composite indicators (thematic categories):

• Environment• Society• Economy• Innovation/ Technology/ Information/ Knowledge/ Education• Globalization

• Innovation: Innovation Indicator Germany (DIW Berlin)Summary Innovation Index (European Commission)Benchmarking EU & U.S. – Innovation and Competitiveness (iTIF)Technology Achievement Index (United Nations)Innovative Capacity Index (Porter and Stern)

Comparison of the ranks of different Innovation Composite Indicators

8


Frühe Bildung Weiterführende Schule Hochschule Innovation

Commission

The DIW Berlin constructed an overall indicatorof innovative capacity on commission of Deutsche Telekom Stiftung and Bundesverband der deutschen Industrie.Creation of a composite Indicator of Germany´sNational innovative capacity:

in an international perspectivewith comprehensible and popular presentable resultsand contemporary inclusion of new research findings.


Innovative ability is ...

1.00

1.38

3.87

4.14

36

4.56

4.90

5.00

5.18

5.38

5.64

6.00

6.65

6.81

6.92

7.00

1 2 3 4 5 6 7

17 ITA16 ESP

14 AUT13 BEL12 IRL11 FRA10 CAN9 NLD8 DEU7 GBR6 JPN5 DNK4 FIN3 CHE2 USA1 SWE

…the ability of a country, the people and companies,

to create new knowledge and implement

this innew, marketable products, processes and services.

…the ability of a country, the people and companies,

to create new knowledge and implement

this innew, marketable products, processes and services.


Construction plan of the innovation indicator for Germany

Individualindicators

Societal Climatefor Innovation

Attitude towardsscience and technology

Social capital

Changingculture

Innovation System

Innovation Indicator Germany

Sub indicators

Intermediatestages

Implementation Competition

Demand

Networking

Education FinancingR&D

180 individual indicators


Measurement of relative innovation abbility of Germany in an international context

Analysis is conducted for 17 of the mostindustrialized countries, with a focus on the triadof Europe, North America and Asia.

12 european countries: Austria, Belgium, Denmark, Spain, Finland, France, Great Britain, Italy, Netherlands, Sweden, Ireland and Switzerland

North Amerika: USA, Canada

Asia: Japan, South Korea.


Wide data range: 180 individual indicators from different sources

„hard“ statistical OECD-indicators (e.g. MSTI)

“soft” indicators: Survey Data of World Economic Forum

Surveys of individuals according to their attitude (World Values Study, Eurobarometer)

Indicators calculated by the DIW Berlin according to foundation , regulation or awareness of corruption (DIW)

Managersurvey of DIW and BDI

Assumption is always: “More, resp. higher values are better”


Method of Indicator formation: Bottom-Up

( )6 1U S A m in

U S A ,S corem ax m in

B 1 B 1B 1

(B 1 B 1 )−

= × +−

„Front-runner“

„last in the lot“Original value

„last in the lot“

1. Step: Standardization of indiviadual indicators (Maximum 7 – Minimum 1)

2. Step: principal component analysis: summary of the standardizedindividual indicators B1 ...BN (for the first six stages)

1 21 Score ScoreHK B1 B2a a= × + × +K• empirical weighting

• „rewards“ (Co-)variation

• emphazises differences


Innovation System

Implementation Competition

Demand

Networking

Education FinancingR&D

Weighting from DIW-BDI Manager survey 2005/2006

21 %

14 %

18 % 3 % 19 %

13 % 11 %

Innovation Indicator Germany7/8 1/8


Attitude towardsscience and technology

Social capital

Changing culture

1/3

1/3

1/3

3. Step: last two stages of integrating and combining



attitude towardsscience and technology

social capital

changing culture

Societal Climate for Innovation

basic attiitude of openness and tolerance

attiitude of womens participation

science and society

attitude of entrepreneurical risk

interests in science and technology

Confidence in innovation actors usage and persepectives in scienceand technology

social capital



Overall Indicator 2009- Ranks and Scores of the17 countriesGermany holds rank 9


Impl

emen

tatio

n

Dem

and

Net

wor

king

R&

D

Edu

catio

n

Fina

ncin

g

Com

petit

ion

Cha

ngin

gcu

lture

Atti

tude

tow

ards

scie

nce

and

tech

nolo

gy

Soc

ialc

apita

l

Overall indicator

Societal Climatefor InnovationInnovation System

123456789

1011121314151617

123456789

1011121314151617

Germany 2009


Impl

emen

tatio

n

Dem

and

Net

wor

king

R&

D

Edu

catio

n

Fina

ncin

g

Com

petit

ion

Cha

ngin

gcu

lture

Atti

tude

tow

ards

scie

nce

and

tech

nolo

gy

Soc

ialc

apita

l

Overall indicator


123456789

1011121314151617

123456789

1011121314151617

Germany 2009

USA 2009

Sweden 2009


Impl

emen

tatio

n

Dem

and

Net

wor

king

R&

D

Edu

catio

n

Fina

ncin

g

Com

petit

ion

Cha

ngin

gcu

lture

Atti

tude

tow

ards

scie

nce

and

tech

nolo

gy

Soc

ialc

apita

l

Overall indicator


123456789

1011121314151617

123456789

1011121314151617

Germany 2009

France 2009

Great Britain 2009


Impl

emen

tatio

n

Dem

and

Net

wor

king

R&

D

Edu

catio

n

Fina

ncin

g

Com

petit

ion

Cha

ngin

gcu

lture

Atti

tude

tow

ards

scie

nce

and

tech

nolo

gy

Soc

ialc

apita

l

Overall indicator


123456789

1011121314151617

123456789

1011121314151617

Germany 2009

Belgium 2009

Spain 2009


4 federal states internationallycompared


Four federal states internationally comparedSubindicator „Education“


Spezialisierung auf Höherwertige TechnologienDeutschlands Innovationstreiber sind die „alten“ Industrien

Chemische Erzeugnisse

Maschinenbau

Elektrogeräte

Kraftfahrzeugindustrie

sonstige Fahrzeuge Pharma

EDV

Nachrichtentechnik

Mediz intechnik

0

1

2

3

4

Wertschöpfung (antvaladd_fuevg, spitz_wertsch)*Exporte (ahsaldo_fuevg, ahsaldo_ht_pop)*Beschäftigung (erwpcap_fuevg, spitz_jeein)*

- FuE – intensiven Industrien lassen sich in Höherwertige- und Spitzentechnologien unterteilen

- Deutschlands Spezialisierung liegt eindeutig bei den Höherwertigen Technologien

- Insbesondere die Kraftfahrzeugindustrie, Maschinenbau, Chemische Erzeugnisse und Elektrogeräte haben in Deutschland höhere Anteile als in den 16 Vergleichsländern

- In den Spitzentechnologien ist Deutschland spezialisiert auf die Medizintechnik

- Deutschland hat im Bereich Höherwertiger Technologien einen komparativen Produktionsvorteil. Wie sieht die weltweite Nachfrage nach FuE-Gütern aus?


Analysis of Specific Weak Points: Example of Education


Results of the subindicator „Education“Germany is still one of the weakest

QualityTertiary educationFinancing Further training

Education

Overall expenditures

Expenditure per particpant

stock

flow

Uni-Ranking

WEF

PISA

1. Denmark2. Sweden3. Switzerland..13. Germany

1. Finland2. Switzerland3.Canada..13. Germany

1. Canada2. Sweden3. Switzerland..11. Germany

1. USA2. Denmark3. Switzerland..12. Germany


Dynamics


Comparison of the Innovation Indicator 2007/ 2008 and 2009 Using the structure of 2009

USAUSA

USACHE

CHE

CHESWE

FINFIN FIN

DNK DNKDNK

CAN CANCAN

JPNJPN

JPNNLDNLD

NLDDEU DEU DEU

GBR

GBRGBR

KOR

KOR

KORFRAFRA FRABEL BEL

BELAUT

AUT AUTIRL

IRLIRL

ESP ESPESP

ITA ITA ITA

SWE SWE

0

1

2

3

4

5

6

7

IDE 2007 IDE 2008 IDE 2009


Clustering


Clustering of the 17 analyzed countries

Top: Sweden

USA

Switzerland

Finland

Denmark

Middle: Japan

Germany

Korea

Great Britain

Netherlands

Austria

Ireland

Canada

France

Belgium

Bottom: Spain

Italy



Conclusion

Innovative capacity of advanced industrialcountries is their most important source of prosperity and growth.The structure of the Innovation Indicator followsthe recomended methodology for buildingcomposite indicators.To be one of the leading countries, it isnecessary to improve most components of thesystem considering the connections and interactionsThe indicator analysis might thus provideguidelines for the EU R&D and innovation policy

Measuring National Systems of Innovation –The „Innovation Indicator“ECFIN „Building a Systemic Approach“

Brussels, 20 Nov. 2009

Prof. Dr. Christian von HirschhausenDIW Berlin / TU Berlin

and Team IDE

Documents

Measuring National Systems of Innovation – The „Innovation ...ec.europa.eu/economy_finance/events/2009/20091120/... · Microsoft PowerPoint - IDE_ECFIN_v08_to_ECFIN_cvh_20112009