Information and Knowledge Society Requires Value Added Investments

Information and Knowledge Society Requires Value Added Investments International Conference Košice Invest 2010 R&D in Slovakia – Discover the Potential 19 th October, 2010

Contents Foreign Direct Investment Trends Foreign Direct Investments in R&D Slovakia - R&D Country New Types of Investments SARIO Promotion Activities Recommendations R&D in Slovakia – Discover the Potential

Introduction "The most important factor behind location decisions are always people and networks of people" Prof. Ricardo Baeza-Yates, Universitat Pompeu Fabra, Barcelona R&D in Slovakia – Discover the Potential

Our SLOGAN "R&D in Slovakia – Discover the Potential" R&D in Slovakia – Discover the Potential

Foreign Direct Investment Trends FDI Inflows, Globally and by Groups of Economies, 1980 -2009 In bln. USD Expected global FDI flows: q 1. 2 trillion USD in 2010 Decline q 1. 3 – 1. 5 trillion USD in 2011 16% q 1. 6 – 2. 0 trillion USD in 2012 37% The changing world - the global financial and economic crisis accelerated the majority of processes in business (e. g. time reduction in innovation cycles) R&D in Slovakia – Discover the Potential Source: World Invetsment Report 2010

Foreign Direct Investment Trends Key World Drivers of FDI in R&D Growth of urbanization Climate Change New specific customer demands Innovation and R&D networks New forms of FDI (greentech, meditech, centres of excellence) Growing global competitiveness Key world drivers of FDI in R&D Search for costefficiency Growth of emerging markets Progress in ICT More motivating investment incentives Access to new technologies and talents Specialization of national strategies R&D in Slovakia – Discover the Potential

Foreign Direct Investment Trends R&D Expenditure Global 1000 R&D in Slovakia – Discover the Potential Source: Department for Business, Innovation & Skills. , THE 2009 R&D SCOREBOARD, 2010

Foreign Direct Investment Trends Top 15 Global Companies by R&D Expenditure per Year 2009 R&D in Slovakia – Discover the Potential Source: Department for Business, Innovation & Skills. , THE 2009 R&D SCOREBOARD, 2010; # - accounts not prepared using IFRS

Foreign Direct Investment Trends Terms The same meaning of terms: "Globalization of corporate R&D" "Internationalization of R&D" "FDI in R&D" "R&D-intensive FDI" Globalization of corporate R&D is an opportunity not just for the host countries but also for corporate subsidiaries, since the latter are more involved in the corporate group's innovation activities. What it means? Corporate subsidiaries are very important element in attracting FDI in R&D in Slovakia – Discover the Potential

Foreign Direct Investments in R&D Motivations FDI in R&D has 2 different motivations: 1. Doing "adaptive R&D" modifies products, processes and technologies according to local needs and supports foreign production facilities, process improvement. (Demand driven FDI in R&D) 2. Getting access to "state-of-the-art knowledge" means that companies invest in foreign countries with an expectation to benefit from excellent, local research and researchers, new technology sources of knowledge and specialized clusters. (Supply driven FDI in R&D) FDI in R&D - evolution or expansion of established subsidiaries - greenfield investments R&D in Slovakia – Discover the Potential

Foreign Direct Investments in R&D Types of Factors Arguments to Attract R&D Investments 1. Parent company strategies related factors Understanding Company Strategies Seek Linkage between: Companies National Innovation Systems 2. Subsidiaries Capabilities related factors Possibility of: Expansion Production Process Improvement 3. Host Country related factors R&D in Slovakia – Discover the Potential Source: Guimón, J. : Government Strategies to Attract R&D-Intensive FDI. OECD Global Forum on International Investment. March 2008. Way for SLOVAKIA

Foreign Direct Investments in R&D Key Drivers and Forms of FDI in R&D Drivers Forms Emerging countries Developed countries Home countries R&D in Slovakia – Discover the Potential Source: Here or There? A Survey on the Factors of Multinational R&D Location, 2006, www. nap. edu Jerry Thursby, Emory University and Marie Thursby, Georgia Institute of Technology, 250 respondents from various industries

Foreign Direct Investments in R&D Location Drivers q The availability of highly educated people (scientists, engineers. . . ) q The quality of universities and R&D infrastructure q Level of university and industry collaboration in R&D q Fiscal and financial incentives to corporate R&D q Cost-efficiency in R&D q Attractiveness of National Innovation System q The presence of lead markets and companies in key technology areas q A clear and enforceable intellectual property rights regime q Quality of pre-investment, investment and after-investment services q Local availability of research and training services q Engagement in world research projects (e. g. : FP 7) R&D in Slovakia – Discover the Potential Source: Adapted according to Guimón, J. : Policies to benefit from the globalization of corporate R&D: An exploratory study for European Union countries

Foreign Direct Investments in R&D Impacts of FDI in R&D Production Networking (1995 -2005) 1. National and regional innovation systems are becoming: q more internationalised q more linked to global production networks q more dependant on foreign decisionmakers 2. Business R&D is shaping the evolution of goverment´s policies: q emergence of new policy strategies q more proactive role of government policies ("attractive policies") q closer connection between innovation policies and FDI promotion policies OEMs – Suppliers Nets (2000 -2010) Clusterisation (1995 -2010) Clusters Networking (2010 -2015) R&D Institutions Networks (2015 -. . . ) Important ROLE: Harmonisation of the national/regional innovation systems with corporate R&D strategies q cities/regional development R&D in Slovakia – Discover the Potential

Foreign Direct Investments in R&D Policy Objectives and Instruments Policy Objectives Instruments Enhance R&D investment climate Improve UNIs and R&D infrastructure; talent development and attracting talents; collaboration with foreign subs. , improving IPR regime Promote inward FDI in R&D International promotion of national R&D capacities, preinvestment and AC services, integration to global networks Absorb benefits from foreign presence After. Care services, technology linkage programmes, promote collaboration Absorb benefits from outward FDI in R&D Support international expansion of domestic R&D centres and UNIs, set up overseas technology units R&D in Slovakia – Discover the Potential Source: Guimón, J. : Policies to benefit from the globalization of corporate R&D: An exploratory study for European Union countries

Slovakia - R&D Country Basic Advantages of Slovakia High-Tech and Medium High-Tech Success stories in R&D Presence of clusters R&D Incentives Competitive R&D costs in EU Domestic R&D infrastruture Natural and technical sciences universities Availability of scientists and engineers Quality of engineers Strategic Geographic location R&D in Slovakia – Discover the Potential

Slovakia - R&D Country R&D Environment in Slovakia FDI and technology transfer (Rank out 133 countries) To what extent does foreign direct investment (FDI) bring new technology into your country? (1 = not at all; 7 = FDI is a key source of new technology) Very good base for FDI in R&D Production process sophistication (Rank out 133 countries) In your country, how sophisticated are production processes? (1 = not at all—laborintensive methods or previous generations of process technology prevail; 7 = highly— the world’s best and most efficient process technology prevails) R&D in Slovakia – Discover the Potential Source: The Global Competitivenes Report 2009 -2010, World Economic Forum, 2010

Slovakia - R&D Country R&D Organizations R&D in Slovakia – Discover the Potential

Slovakia - R&D Country National R&D Capacities I Building up 45 Centres of Excellence in Slovakia I Almost 60 research institutes of the SAS I More than 30 foreign R&D centres in Slovakia I Wide range of university centres and laboratories I More than 20 domestic R&D organizations I Building up 8 regional innovation centres R&D in Slovakia – Discover the Potential

Slovakia - R&D Country Highly Perspective Opportunities for Doing Business Automotive Industry & Supplier Sector ICT& Software Development R&D New and Lightweight Materials Electrotechnics Electronics Medical Technologies Welfare & Care Energetics& Renewables R&D in Slovakia – Discover the Potential

Slovakia - R&D Country Success Stories in R&D Johnson Controls Engineering Centre Trenčín R&D LEONI Autokabel Slowakia Trenčín ON Semiconductor Bratislava Development Centre Technology Lab Siemens Žilina R&D Center Alcatel-Lucent Bratislava Continental Automotive Systems R&D Centre Zvolen R&D in Slovakia – Discover the Potential

Slovakia - R&D Country Established US Foreign Investor in Slovakia: Johnson Controls ŽILINA KIA and JC-JIT NÁMESTOVO JC-Interior TRENČÍN JC-Engineering TRNAVA PSA MARTIN JC-Seat Covers Lozorno VW and JC-JIT BRATISLAVA JC Business Centre LUČENEC JC-Foam R&D in Slovakia – Discover the Potential Source: Johnson Controls Engineering Centre, Trenčín

New Types of Investments Example from Germany (1) I Perspective industries of new type of investments GERMANY R&D in Slovakia – Discover the Potential Source: www. gtai. com

New Types of Investments Example from Germany (2) I National Electromobility Development Plan for Germany invests more than EUR 500 million - Objective: 1 million electric vehicles on German roads by 2020 Can we consider this to be an inspiration for Slovakia? Investments into electromobility infrastructure development R&D in Slovakia – Discover the Potential Source: www. gtai. com

New Types of Investments IDA Ireland Example Focus on Greentech & Services Innovation Industrial sectors: q Life sciences (Pharma&biotech, medical devices) q ICT q Financial services – global services q High-end manufacturing q Diversified industries and engineering q R&D and Innovation (centres of excellence, testing labs) q Cleantech R&D in Slovakia – Discover the Potential Source: IDA Ireland Strategy – Horizon 2020

New Types of Investments Low-Carbon Economy (1) Investing in Low-Carbon Economy Low-carbon foreign investments – can be defined as transfer of technologies, practices or products by TNCs to host countries, through equity (FDI) an non-equity TNC participation, generating significantly lower GHG emissions than would otherwise be the case. (WIR 2010) 3 Key Low-Carbon Business Areas and Industries Alternative/Renewable electricity generation Low-carbon technology manufacturing (wind turbines, solar panels, biofuels) TNCs are key actors in contributing to the establishment of climate-friendly economies R&D in Slovakia – Discover the Potential Source: World Investment Report 2010 GHG – green house gas emissions, TNC – Transnational Corporation Recycling

New Types of Investments Low-Carbon Economy (2) 2 types of Low-carbon Foreign Investments Introduction of low-carbon processes reducing GHG emissions related to how products are made Creation of low-carbon products and services lowering GHG emissions in how they are used (upgrade of existing TNC operations as well as new investments) (e-cars, "power saving" electronics and light bulbs, RES equipment, integrated transport systems) The main sectors (areas of emissions): q power and industry (inc. manufacturing as well as oil and gas) q transport, building and waste management q agriculture and forestry Governments should to identify opportunities for such investment in their countries and formulate strategies to promote it. R&D in Slovakia – Discover the Potential Source: World Investment Report 2010 GHG – green house gas emissions

SARIO Promotion Activities Creation of Infomaterials Publication of Informative Promotion Materials Increasing of awareness about R&D (conferences, seminars. . . ) Investment Seminars Abroad SARIO = Associated partner in cluster´s projects Communication & Networking with UNIs & other R&D institutions R&D in Slovakia – Discover the Potential

SARIO Promotion Activities Cooperation with Renowned Domestic Organizations PANASONIC CENTER, TOKYO (R&D Investment Seminar in Japan-2009) SARIO-TUKE Projects: AUTOCLUSTERS Auto. Net R&D in Slovakia – Discover the Potential

Recommendations q Improving the FDI attracticion and promotion policy q Preparing tailored FDI Project Proposals q More visible to the investment community (marketing campaigns, missions, etc. ) q Marketing of Slovak R&D infrastructure (UNIs, SAS, . . . ) q Focus on Slovak talent development programmes, "special talent university learning classrooms" q Focus on Suppliers Development Programmes – Aftercare services q SARIO Advisory Board consisting of established investors – close collaboration q Prepare strategy for building electromobility infrastructure q Prepare strategy for attracting FDI in green tech R&D and cleaner production q Project Networking (SARIO as a partner in EU projects) q Updating of National Innovation System R&D in Slovakia – Discover the Potential

R&D in Slovakia – Discover the Potential "Our TREASURE is in our highly educated PEOPLE!" ". . . Discover the Potential" R&D in Slovakia – Discover the Potential

Thank you for your attention Ing. Vladimír Švač, Ph. D. Address: SARIO Martinčekova 17 821 01 Bratislava Slovakia Tel. : +421 2 58 260 343 Email: vladimir. svac@sario. sk R&D in Slovakia – Discover the Potential