Technical Session V - Policy and Institutional Frameworks for Hi-tech Innovation Systems

1. National Consultative Workshop on Strengthening
and Road Mapping of Emerging Technology
Innovation Systems of Sri Lanka
17-19 November 2015
Colombo, Sri Lanka
Emerging Technology Innovation Systems:
Key considerations for policy making and strategy
development
Satyabrata Sahu, Ph.D.
Asian and Pacific Centre for Transfer of Technology (APCTT)
of the United Nations Economic and Social Commission for Asia and the Pacific (UN-ESCAP)

2. Outline
1. Meeting Sustainable Development Goals
2. New and emerging technologies – policy trends, issues &
challenges
3. Factors influencing high-tech innovation systems
4. Paths of emerging technology innovation systems
5. Evidence-based policy making – Biotechnology &
Nanotechnology
6. Indicators at functional/operational level
7. Impact of globalisation on innovation system performance
8. Strategies for SMEs for international participation
9. Country experiences (Germany, UK, Rep. of Korea, China)
10.Concluding remarks

3. 1. Meeting Sustainable Development Goals
 17 SDGs and 169 targets
 Goal 9: Build resilient infrastructure, promote
sustainable industrialization and foster innovation
• 08 targets in the areas of:
Infrastructure; Inclusive and sustainable industrialization; Access of SMEs
to financial services, including affordable credit, and their integration into
value chains and markets; Adoption of clean and ESTs and industrial
processes; Enhance scientific research, upgrade the technological
capabilities of industrial sectors; Domestic technology development,
research and innovation; Access to information and communications
technology

4. 2. New and emerging technologies
 Range of dynamic new disciplines and technologies :
Biotechnology, genomics, nanotechnology, advanced
materials, synthetic biology, ICTs, new and renewable energy
 Should be part of national research and industrialization
agendas because they are:
• Instrumental in meeting global and national challenges
• Strong contributors to future economic growth in an
increasingly technology-driven world

5. New and emerging technologies (cont.)
Policy trends
 Focus on developing specific technologies
CANADA – Medical isotope production and supply
FINLAND - Fuel cell technologies
GREECE - Microelectronics
UK – Space technology - small satellites
 To exploit specific resources in which the country might have a competitive
advantage
ARGENTINA - Textile products based on the camelid fibres found in the Andean region
CANADA - Forestry value chain
 Focus on global challenges in areas such as the environment, energy or health
AUSTRALIA - Climate change science
ISRAEL - Oil-substitute technologies
 Hybrid approach
NORWAY - R&D policy emphasis on nanotechnology, biotechnology and ICTs

6. New and emerging technologies (cont.)
Issues and challenges
 Multidisciplinary and interdisciplinary
 Converging technologies
 Challenges for integrating distinctly different IP doctrines for
different emerging technologies developed over time.
Biotechnology may be heavily patent-oriented, while software has
taken the path of copyright.
 Development of statistics and metrics to measure emerging and
converging technologies adequately
 Development of new funding models to promote emerging
technologies
 Challenges to interdisciplinary research and to re-examine the
structure of research institutes
 Public engagement and acceptance of emerging technologies

7. 3. Factors influencing high-tech innovation systems
• Study on Finnish innovation policy’s capabilities to promote
emerging industries - the life sciences and the solar energy sectors
Underlying mechanisms which hinder system performances
• Limited commercial experience; Scarce venture capital; Weak local
and global networks; Poor legitimation
Underlying mechanisms which induce system performances
• High-level research and education; Good infrastructure; Public R&D
support
(Source: Matti Pihlajamaa, et al, Eur J Futures Res (2013) 1:8)

8. 4. Paths of emerging technology innovation systems
• Four paths of emerging technology innovation systems
1. The Science and Technology Push (STP) motor
2. The Entrepreneurial Motor
3. The System Building Motor
4. The Market Motor
• All four paths are complementary and supplementary
to one another
(Source: Suurs R.A, Hekkert M.P, (2009), Cumulative causation in the formation of a technological innovation system:
The case of biofuels in the Netherlands, Technological Forecasting & Social Change no 76)

9. Paths of emerging technology innovation systems (cont.)
• Allocation of financial resources
• Setting up of government supported R&D
programs
• Increasing research outcomes
1. The Science and
Technology Push
(STP) motor
• Firms, utilities initiating innovative projects (e.g.
adoption experiments and demonstration)
• Project funding and subsidies
• Opportunities for commercial or societal gain
2. The
Entrepreneurial
Motor
(Source: Suurs R.A, Hekkert M.P, (2009), Cumulative causation in the formation of a technological innovation system:
The case of biofuels in the Netherlands, Technological Forecasting & Social Change no 76)

10. Paths of emerging technology innovation systems (cont.)
• Firms and other actors organize themselves in
platforms for sharing knowledge, co-ordinate
further technological development, and lobby
for resources
3. The System
Building
Motor
• Setting up of institutional structures to facilitate commercial
demand for the emerging technology
• Increasing availability of resources for existing industry
• Opening up of possibilities for new entrants to adopt the
emerging technology
• The newly entered firms are likely to make large investments
• They may also develop marketing strategies, thereby increasing
demand for the emerging technology further
4. The Market
Motor
(Source: Suurs R.A, Hekkert M.P, (2009), Cumulative causation in the formation of a technological innovation system:
The case of biofuels in the Netherlands, Technological Forecasting & Social Change no 76)

11. 5. Evidence-based policy making
Biotechnology and Nanotechnology
• STI policy making needs to be based on
qualitative/quantitative evidences, i.e. indicators
• Macro / National level policy making & strategy development
• OECD approach:
a. Key Biotechnology indicators
b. Key Nanotechnology indicators

12. Evidence-based policy making (cont.)
Key Biotechnology Indicators - OECD
Biotechnology firms
• Number of firms active
• % of small biotech firms
Biotechnology R&D
• Biotech R&D exp. in the business sector
• Biotech R&D intensity in the business
sector
• % of biotech R&D exp. by dedicated
biotech R&D firms in the services sector
• % of biotech R&D exp. performed by small
biotech/R&D firms
Public-sector biotechnology R&D
• Intramural biotech R&D exp. in
government and higher education sectors
• Intramural biotech R&D exp. In
government and higher education sectors
as % of total government and higher
education sectors R&D exp.
Biotechnology applications
• % of dedicated biotech firms by
application
• % of biotech R&D by application
Biotechnology patents
• Share of countries in biotech patents
• Revealed technological advantage in
biotechnologies
Source: http://www.oecd.org/sti/inno/keybiotechnologyindicators.htm

13. Evidence-based policy making (cont.)
Key Nanotechnology Indicators - OECD
Nanotechnology firms
• Number of firms active
• % of small nanotech firms
Nanotechnology R&D
• R&D exp. in the business sector
• R&D intensity in the business sector
• % of nanotech R&D exp. by dedicated
nanotech R&D firms in the services
sectors
• % of nanotech R&D exp. performed by
small nanotech R&D firms
Public-sector nanotechnology R&D
• Intramural nanotech R&D exp. in the
government and higher education
sectors
• Intramural nanotech R&D exp. in the
government and higher education
sectors as % of total government and
higher education sectors R&D exp.
Nanotechnology patents
• Share of countries in nanotech patents
• Revealed technological advantage in
nanotechnologies
(Source: http://www.oecd.org/sti/nanotechnology-indicators.htm)

14. 6. Indicators at functional/operational level
• Functional/operational level indicators are required for designing
specific interventions at programme and institutional levels
• Necessary to delineate functional levels of innovation systems
• Main functions of a ‘model nanotechnology innovation system’
(a) Knowledge creation & development
(b) Knowledge diffusion and development of positive externalities
(c) Guidance & direction
(d) Entrepreneurial activities
(e) Market formation
(f) Resource mobilization
(g) Institutionalization and legitimation
Source: http://www.globelicsacademy.org/2011_pdf/Mohammadi%20Mehdi.pdf

15. Indicators at functional/operational level (cont.)
Activities/ Sub-
functions
Main indicators
Volume of
knowledge creation
& development
• Publications; patents;
• Research projects (academic and non academic);
• Existence of national or big research projects;
Mode of knowledge
creation &
development
• Basic researches; developmental researches;
• Commercialization of knowledge;
• Problem-based or need-based researches
Process of
knowledge creation
& development
• Internal R&D;
• Knowledge transfer and learning
(a) Knowledge creation & development

16. Indicators at functional/operational level (cont.)
(b) Knowledge diffusion and development of positive externalities
Activities/ Sub-
functions
Main indicators
Formation of
division of labour
and specialized
value chain
• Existence of specialized actors in value chain;
• Existence of extended and specialized labour market;
• Size and number of networks and clusters
Information and
knowledge flows
and spill-over
• Workshops, conferences and exhibitions;
• International research and technological collaborations;
• Industry-science interactions

17. Indicators at functional/operational level (cont.)
(c) Guidance & direction
Activities/ Sub-
functions
Main indicators
Visions and
expectations about
the growth
potential
• International and external trends and experiences;
• Promotional activities by scientific community and activists;
• Relevance of existing expertise
Policy development
and priority setting
• Development of clear vision and objectives by the
• government;
• Development of priority areas;
• Developing incentives, supports and complementary standards
Current and
complementary
businesses
• Status of related businesses in the country;
• Tendency of national and big sectors or companies to enter in
this field;
• Existence of technical bottlenecks in the current businesses

18. Indicators at functional/operational level (cont.)
(d) Entrepreneurial activities
Activities/ Sub-
functions
Main indicators
Mode of
entrepreneurship
• Start-ups and spin-offs;
• Diversified established firms;
• Combination of current firms in this sector (private or
public)
Experiences in
using technology
and its
applications
• Type and successfulness of technology applications
and experiments

19. Indicators at functional/operational level (cont.)
(e) Market formation
Activities/ Sub-
functions
Main indicators
Market size and its
growth
• Market size and related niche markets;
• Potential export market
Incentives and
inducement
mechanisms for
market growth
• Existence of market competitive advantage by incentives
and supports;
• Existence of local content policies and standards or
governmental purchasing rules;
• Alignment with national economic and commercial policies
Customer groups
and their
purchasing
behavior
• Existence of public or private customers;
• The role of leading customers;
• Role of specialized customers with non-routine purchasing
behavior

20. Indicators at functional/operational level (cont.)
(f) Resource mobilization
Activities/ Sub-
functions
Main indicators
Developing human
capital and
specialized labour
force
• Volume and quality of human resource (specially from
• universities);
• Existence of specialized & experienced HR
• Existence of complementary expertise (management,
entrepreneurship, …);
• Existence and quality of non-academic trainings
Mobilization of
financial resources
• R&D investments by government and private sectors;
• Volume of venture capital and financial supports for
• entrepreneurship;
• Existence of loans and grants for academic researches
Existence of
complementary
assets
• Existence of complementary infrastructures like incubators
and technology parks, laboratories, networks;
• Existence of complementary products, services and know-
how

21. Indicators at functional/operational level (cont.)
(g) Institutionalization and legitimation
Activities/ Sub-
functions
Main indicators
Developing
necessary
institutions and
regulations
• Alignment with current regulations and laws;
• Development of special institutions and regulations;
• Development of product and service standards;
• Development of IPR-related institutions
Formation of
advocacy coalitions
and interest groups
and their lobby
power
• Size and growth of advocacy coalitions & interest groups;
• Existence of a powerful leading organization (policy maker);
• Coherence between activists about priorities and future of
technology;
• Existence of actors with high political and financial power in
the sector
Promotional and
extension activities
• Exhibitions and meetings;
• Promotional programs in the media and public extension for
introducing the new technology and its applications

22. 7. Impact of globalisation on innovation system
performance
• Opening national markets to foreign competitors’ products is a
powerful means of strengthening competition.
• Openness facilitates access to foreign know-how and
technologies.
• Trade openness and integration allows for economies of scale
and specialisation.
• Trade openness leads economies to specialise in sectors which
have a comparative advantage
Source: http://www.oecd.org/innovation/inno/50586251.pdf

23. Impact of globalisation on innovation performance
(cont.)
While openness offers opportunities to tap into global
knowledge stocks, the development of innovation
capacity in national industries requires supportive
policy measures from the Government :
• Access to finance for businesses
• Easing conditions for entrepreneurship
• Provision of suitable skills and improving access to
skilled human capital
Source: http://www.oecd.org/innovation/inno/50586251.pdf

24. 8. Strategies for SMEs
for international participation - Biotechnology
• Strengthen financing channel building and resolve the problem of
difficult financing (Govt. funds & credit, fiscal incentives, venture
capital, equity, etc)
• Build and promote enterprise clusters with international operations
• Base on self-advantages to find a position in the global value chain -
low manufacturing cost for continual progress
• Improve technology innovation and shift to the high end of value
chain
• Learn from international experiences and continue to improve
managerial level
Source: Tech Monitor, Jul-Sep 2012

25. Strategies for SMEs for international participation - Nanotechnology
Major global companies involved in bulk production of nanomaterials
Source: Tech Monitor , Oct-Dec 2012
Name of the Company Country Products
Bayer Germany Baytube carbon nanotubes
BASF Germany
Various types of nanomaterials (usage includes food additives and
sunscreens)
Degussa Germany Range of ultrafine nanomaterials
ICI/Uniquema UK Nanomaterials (including nano titanium dioxide for sunscreens)
Elementis UK Nanomaterials (including nano ZnO based sunscreens)
QinetiQ Nanomaterials Ltd. UK Range of nanomaterials
Mitsubshi Chemical
Corporation
Japan Carbon nanotubes
Advanced Nanomaterials Australia
Range of nanomaterials (usage include sunscreens, catalysts,
cosmetics and coatings)
Nanophase USA Range of nanomaterials
Hyperion Catalysis USA Nanotubes for incorporation into plastics
Carbon Nanotechnologies Inc USA Carbon nanotubes
Zyrex Technologies USA Carbon nanotubes
Umicore Belgium Nanomaterials (including nano titanium dioxide for sunscreens)
Nanogist Co., Ltd. South Korea Nanomaterials (anti- microbial silver nanoparticles)
Zhaong Pion Power-Tech Co.Ltd China Li-ion batteries
Suzhou Nanotech Co.Ltd China Nanomaterials for drug delivery systems
UC nanotechnologies Inc China Sensors

26. 9. Country experiences
High-Tech Strategy of Germany
The High-Tech Strategy is based on five pillars:
1. Priority task areas: The digital economy and society, the sustainable economy and
its energy, the innovative workplace, healthy living, intelligent mobility and civil
security.
2. Better transfer: Creating new instruments for improved regional, national and
international networking between science and industry.
3. Greater dynamism in innovation: Providing special support for SMEs, and
technology-oriented start-ups, with a view to enabling such companies become
technology leaders that can shape future markets.
4. Improved framework conditions: Supply of skilled personnel; availability of
innovation financing; providing other societal, technical and legal foundations
5. Intensified dialogue: Active participation by society; openness to technology; public
participation; social innovation
Source: https://www.bmbf.de/pub/HTS_Broschuere_engl_bf.pdf

27. Emerging technologies & industries strategy – UK
• Identified and invested in seven high-potential technologies of strategic national
importance – synthetic biology, energy efficient computing, energy harvesting, non-
animal technologies, emerging imaging technologies, graphene and quantum
technologies.
• Strategic themes: (1) To identify and evaluate emerging technologies with
disruptive potential; (2) To create a coordinated programme; (3) To accelerate the
journey to market; and (4) To build critical mass and nurture capability.
• Objectives: (1) Identify exciting early-stage technologies and evaluate their global
market potential; (2) Invest in a pipeline of emerging technologies with high
commercial potential and help to accelerate their journey to market; (3) Invest in the
creation of demonstrators (of varying kinds), roadmaps and standards, taking an
international perspective; (4) Help to build connected ecosystems that support
growth.
(Source: Innovate UK. https://www.gov.uk)

28. Innopolis of Rep. of Korea
 R&D-leading innovation clusters wherein science, technology, and knowledge are
efficiently created, transferred, and utilized (Daedeok, Gwangju, Daegu, Busan)
 INNOPOLIS Daedeok has been known as ‘The Heart of the Creative Economy’ for
Korea’s science and technology growth and a rapidly evolving innovation hub for
high-tech commercialization
• Hosts top-class scientific and technical human resources, national research
laboratories and research universities within, and continuously attracts major
contracts from private sector R&D organizations.
• 60 public (25) and private (35) research institutes operating within the ecosystem
• Supported over 906 technology transfer between the domestic/global stakeholders.
(31 of start-ups have gone public at KOSDAQ)
• Number of internationally registered patents exceeds 10,000.
(Source: https://www.innopolis.or.kr/eng_sub0201)

29. Hightech industrial zones of China
Major thrust of China’s STI policy in 1985
739 incubators, 50 national university-sponsored science parks, 441
technology transfer institutions, 175 productivity promotion
centers, 732 products inspection and examining organizations, 504
strategic alliances of industrial and technological innovation,
industrialization bases for new and high technologies, etc.
Produced more than 13,000 companies with assets over 100 million
yuan, about 18,000 tech-based enterprises, over 1,000 companies
that are publicly traded in different stock exchanges in international
financial centers, and, in 2012 alone, 65,000 newly registered
business ventures.
(Source: China Science and Technology Newsletter (No. 19), 2013/12/05)

30. 10. Concluding remarks
• New and emerging technology policy based on national strengths
and capacities
• Development of appropriate statistics and metrics to measure new
and emerging and technologies
• Indicators at functional and operational levels for designing
interventions at programmatic and institutional levels
• Trade openness and liberalization to facilitate competition, access
to foreign know-how and technologies, and specialization
• Supportive policy measures for promoting innovation capacity in
national industries to cope with trade liberalization and
competition
• Critical factors - Regional, national and international networking;
Technology-based entrepreneurship, start-ups, incubators,
innovation clusters; Availability of innovation financing

31. Thank you
For more information, contact
Satyabrata Sahu, Ph.D.
UNESCAP-APCTT
P.O. Box 4575, C-2, Qutab Institutional Area, New Delhi – 110 016, India
Tel : 91-11-30973756 | Fax : 91-11-26856274
Email : sahus@un.org | Website : www.apctt.org, www.techmonitor.net