Box 5.3 Innovation with Chinese Characteristics. The relative role of government institutes in the national innovation system has declined, however. In the U.S., Dr. Harhoff noted, young inventors seeking to start a company often go to angel. 114 “Caterpillar Expands China Research Center,” Business Daily Update (China) (January 10 2012). “We are more likely to succeed if we combine our resources and technology,” Minster Hoyer said.371. Not a MyNAP member yet? The center files around 100 patents a year. declined in inflation-adjusted terms since 2001.436 Canada’s BERD intensity is among the lowest of industrialized economies. It stated that Canada “must be connected to the global supply of ideas, talent, and technologies.” Among other things, the plan called for focusing on research relating to the environment, natural resources and energy, health, and information and communication technologies. Emerging Markets Gain Power . Innovation as generally practiced in China is more modest. From a historical perspective, global growth of 3 and one-half percent is weak. For example, according to the MGI analysis (exhibit), less than half (45 percent) of companies that reached the top quintile with respect to economic-profit generation between 2001 and 2005 were still there a decade later. The initiative involves as least 85 industry partners and 280 R&D programs with 1,750 researchers and has generated cumulative investment of more than $100 million. 218 NASSCOM data can be accessed at Data can be accessed at http://www.nasscom.in/indian-itbpoindustry. In particular, there is a general lack of openness and transparency in funding decisions, which negatively affects the ability of China to recruit first-rate scientists. cit., p. 43. Because students must focus on either liberal arts or science and technology at an early age, many do not get broad interdisciplinary education. The country’s information-technology services industry. While some of India’s 358 universities and more than 20,000 colleges are huge by Western standards, overall quality is poor.199 India’s National Knowledge Commission estimates the. 403 See remarks by Fientje Moerman, former Minister for Economy, Enterprise, Science, Innovation, and Foreign Trade, in Innovative Flanders. 6 among OCED nations in scientific publications per capita and fifth in quality of publications.451 Much of the credit goes to measures launched in the mid-1990s. It set a target of raising national R&D spending to 3.5 percent of GDP by 2015. Flanders’ biotech facility, the Interuniversity Institute for Biotechnology (VIB), has an equally ambitious mandate to translate research into innovative industry. Given the high cost and long time horizons of chip research, partnerships like the one with IMEC are essential to sustaining the semiconductor industry, according to Allen Bowling of Texas Instruments.411 In August 2010, Intel announced it was investing in a new ExaScience Lab in Leuven with IMEC, the Agency for Innovation by Science and Technology, and five Flemish universities that aim to achieve breakthroughs in power-reduction software to run on future computers delivering 1,000 times the performance of today’s machines.412. 249Ministry of Economic Affairs, “Multinational Innovative R&D Center in Taiwan,” updated Oct. 5, 2011. Mr. Deng of the State Council Research Office noted that in the global supply manufacturing chain, China produces mainly low- and mediumlevel goods. cit. 487 Presentation by Masayuki Kondo, op. quarters of those poor live in rural areas.169 Only 16 percent of India’s population has completed high school and 61 percent of the adult population is literate, compared to 97 percent in China. 226 “Union Budget 2012: Full Text of Pranab Mukherjee’s Speech,” IBN Live (March 16, 2012). The nation is becoming a global leader in research in infectious diseases and environmental technologies such as water and waste treatment. These funding increases helped Japanese universities and national laboratories upgrade laboratories that had become outdated.480. Then the government develops the necessary skills base, builds or upgrades common laboratory facilities, and systematically acquires the needed technologies through a combination of licensing, in-house R&D, and partnerships with foreign companies and universities. SOURCE: Yuqing Xing and Neal Detert, “How the iPhone Widens the United States Trade Deficit with the People’s Republic of China,” ADBI Working Paper Series, No. Now the island of 5.1 million aspires to become one of the world’s premier innovation zones for 21st century knowledge industries. 373 Cologne Institute for Economic Research data cited in Bertrand Benoit, “German Gap Costs €20 bn,” Financial Times, Aug. 20, 2007. In 1996, a program called Technology Partnerships Canada, which had focused on the defense industry, began covering 25 to 30 percent of companies’ cost of industrial research, prototype development, and testing in other industries. 174 GERD = gross domestic expenditures on research and development. Since such a large share of Taiwanese R&D is conducted at Academia Sinica, national laboratories, and industrial research institutes, the Council regards such rules are major obstacles to commercialization and recommends that they be eased. An Emerging Global Issue Globalisation has had positive effects on the development of tax systems and has encouraged countries to engage in base broadening and rate reducing tax reforms. 489 See presentation by Sadao Nagaoka of Hitotsubashi University in 21st Century Innovation Systems for Japan and the United States. It seeks to raise the gross enrollment ratio in higher education, or the number of qualified students who attend, from 11 percent in 2007 to 21 percent in 2017. The majority of firms run and owned by universities are not engaged in science and technology. The study noted that 42 percent of Germans think one should set up a business if there is a chance of failure, compared to nearly 70 percent of Koreans and Irish and 74 percent of Americans. 346 Gretchen Vogel, “A German Ivy League Takes Shape,” Science Magazine, Oct. 13, 2006. according to a BMBF report. cit., p. 43. State-owned industrial companies, meanwhile, tend to be strong advocates of indigenous innovation policies in order to protect their domestic franchises. 255, To help manufacturing industries take root, government agencies also offer generous assistance, including research grants, early-stage capital, incubators, tax breaks, low-cost access to laboratories and production facilities at world-class science parks, and efforts to build local supply bases of key materials and components. Projects run by companies can get soft loans at 3 percent interest if Indians or non-resident Indians control them. Combined with other incentives, he said, China has an “almost insurmountable” cost advantage over the U.S. as a place to build and operate a factory.61, Some government aid to industry has led to friction with trade partners. In nanotech, Japan was spending almost as much on research as the United States—$940 million—as of 2004. Battery Industry for Electric-Drive Vehicles: Progress, Challenges, and Opportunities, Charles W. Wessner, ed., Washington, DC: The National Academies Press. Leuven Inc., as it is called, has spun off more than 100 companies.406, To strengthen the flow of knowledge from universities to business, the Flanders government in 2006 launched a large €232 million program for strategic basic research of benefit to industry, the non-profit sector, and government policy objectives. “It will not be enough to merely improve technologies and raise efficiency, as has been done over the past few decades,” the plan states. 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