The emerging role of Public-private partnerships in Spanish

The emerging role of Public-private partnerships in Spanish S&T and innovation policies Luis Sanz-Menéndez Ministry of Education and Science CSIC Institute for Public Goods and Policies OECD Working Party of Senior Budget Officials Symposium on Evaluating Innovative Approaches to Public Service Delivery Madrid, 30 -31 October 2007 Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 1

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 Outline of the presentation PPPs in the context of Research and Innovation Policies Features of the research and innovation system Former PPPs initiatives prior 2004 OECD Review of the PPPs in Spain (2004) Background and rationales for new PPPs Responses to the OECD Review: CENIT Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 2

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 The “context” of research and innovation policies confronting PPPs Evolution and changing targets of science, technology and innovation policies n n n Research direct performance Mission oriented and applied technologies Indirect measures (incentivating private investments) Production, diffusion and utilization of knowledge as central factors for economic growth, social welfare and sustainability Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 3

Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) International linkages 400 Share of technology intensive exports Performance range of G 7 countries Intensity of venture capital investments Contribution of foreign affiliates to R&D Share of patents with foreign co-inventors Science-industry linkages Breadth of international coauthorship ties Firm co-operation with government Firm co-operation with universities Business funding of higher education R&D Innovative output Business funding of public R&D Scientific output Concentration of "triadic"patent families Performance range of OECD countries Density of innovative firms Share of S&E articles in physical sciences Share of S&E articles in life sciences Human resources in S&T Scientific and engineering publications Graduation rate at Ph. D level in S&E Population of business researchers R&D activities Population of professionals and technicians Intensity of public R&D expenditures Intensity of business R&D expenditures Macro-economic performance Intensity of R&D expenditures 450 Annual MFP growth 500 Annual growth of GDP per capita OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 Profiling the Spanish Innovation System Spain Technological entrepreneurship & industrial structure 350 300 250 200 150 100 50 0 4

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 Situation and evolution of R&D and innovation in Spain R&D effort still low but growing fast, GERD/GDP: 1. 10% (2003); 0. 82% (1997) Industry financed R&D also growing [48, 4% (2003); 44, 7% (1997)], but still far from the EU average Significant contribution of business to the funding of HERD and GOVERD Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 5

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 Share of HERD and GOVERD financed by industry Share of HERD financed by industry Share of GOVERD financed by industry 12. 5 10. 0 Spain 7. 5 EU-15 5. 0 Spain Total OECD 2. 5 0. 0 1981 1984 1987 1990 1993 1996 1999 2002 Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 1981 1984 1987 1990 1993 1996 1999 6

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 Situation and evolution of R&D and innovation in Spain Innovative firms: 20, 6% (2002), but improving Innovative firms in Spain cooperate in innovation less than in other European countries Size of companies is positively correlated with innovation cooperation Suppliers are the main source of innovation information for SME, while Universities play a significant role for larger companies Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 7

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 Innovative firms cooperating in innovation (%), 2000 Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 8

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 Challenges and opportunities of the Spanish innovation system Industrial structure is dominated by services, low and medium technology industries and SMEs PROs (specially universities) are the biggest knowledge producers and a reservoir of S&T capabilities (70% of all researchers) Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 9

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 Other features of the R&D and innovation policy environment Institutional fragmentation of S&T policy domains: Various Ministries of the central government involved Regional governments (17) also play a very active role in S&T and innovation policies S&T and innovation action is developed under then umbrella of the National R&D and Innovation Plan, resembling EU RTD FP Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 10

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 Policy targets and implementation Therefore promoting “technology transfer” from PROs to industry and fostering sustained “cooperation between industry and science” has been part of the underlining rationales and explicit objectives of S&T and innovation policies …but: historically too much fragmentation in the programs and policy initiatives, because of the dominant bottom-up policy model Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 11

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 Types and cases of PPPs for R&D and innovation: 1. Public funding for RTD&I in a context of increasing 2. 3. 4. 5. 6. 7. 8. relevance of PP collaboration Constructing and supporting a common pool of resources for technological services and innovation and under PPP Competence RTD centers in specific technology areas Steering Public research activities under PPPs Clustering and Agglomeration strategies under PPPs Changing the R&D regulatory environment to encourage PPPs and blurring boundaries between public and private New commercialization, start ups and spin off strategies of PROs PPPs for strategic private funding of RTD of general interest areas Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 12

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 General features of the PPPs for research and innovation before 2004 Small size of the projects supported Limited timeframe of the cooperation Multiple instruments and Fragmentation Stretching of traditional instruments of public policy Bottom up initiatives from the societal actors Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 13

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 As a way of balance before 2004 Many initiatives and experiments, but not canonical PPPs programs Some of the most interesting cases are bottom-up initiatives, but have been taken on board by governments Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 14

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 Problems and opportunities in 2004 (I) A new, or an evolved, policy rationale is driving the innovation system into more PPPs (new conditions for a more intelligent public funding) New initiatives from below (firms and PROs) and experiments that implies a “societal demand” of PPPs approaches are emerging Political opportunity: 25% of R&D budget increase expected next 4 years. Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 15

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 Problems and opportunities in 2004 (II) A more pro-business view of S&T and innovation policies favours the development of PPP, but the institutional architecture of S&T&I policies (Ministries of Education & Science versus Industry & Technology) often creates important constraints because of the “customer-client view” of the Ministries in the context of distributive politics Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 16

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 Problems and opportunities in 2004 (III) International diffusion of PPPs for innovation policy is a relevant factor Need of “policy entrepreneurs” and “strategic research actors” (with negotiating skills) to overcome the pervasive battles over distributive politics within inappropriate institutional environments and to built an “advocacy coalition” for PPPs OECD could play a role in shaping the outcome Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 17

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 The impact of the OECD evaluation End 2003: the Spanish authorities requested the cooperation from OECD to evaluate the current practices of PPP for Research and Innovation (CSTP-TIP) The Review was developed in 2004 and published early 2005. Mid 2005: The Spanish Government launched (in the context of National Reforms Program) INGENIO 2010, including the CENIT Programme (Strategic Consortia for Technological Innovation) Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 18

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 Results of the OECD PPP review OCDE(2005): “…the Spanish system of research and innovation has now reached a sufficient level of sophistication for a new approach to the promotion of science-industry relationships to be successfully experimented […] adapting the model implemented in diverse OECD countries to the Spanish conditions. ” Other countries experiences Australia Austria France Co-operative Research Centres (CRCs) Programme Kplus, Kind/Knet Research and Technological Innovation Networks (RRITs) The Netherlands Sweden Leading Technology Institutes (LTIs) Competence Centers CENIT (Consorcios Estratégicos Nacionales de Investigación Tecnológica) Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 19

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 CENIT Background and Rationale (1) Strong role of universities and PRO in the Spanish Research and Innovation system Industrial structure: nlarge share of low-medium tech industries, nlarge share of SMEs, nlarge share of MNCs, n. Large share of service economy Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 20

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 CENIT Background and Rationale (2) Fostering sustained cooperation between industry and science, that is. . . over a longer period (min. 5 years). . . on an institutional basis (but flexible). . . with an ambitious research programme (significant budget) Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 21

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 Goals of PPPs for Research and Innovation Encouraging existing firms to engage in more radical types of innovation Promoting technology-based start-ups Increasing the role of the Public Research sector in providing a research base to be utilized co-operatively with industry. . . but: multi-purpose programmes with many goals - problem of target setting! Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 22

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 Description of the Programme – CENIT since 2005 fostering long-term collaboration between enterprises and public research institutions Despite some technology areas mentioned, no ex-ante setting of thematic priorities Competitive selection process (public calls) First call subsidies for 200 M€ (16 projects) Second call: Subsidies for Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 23

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 CENIT PP collaboration programme versus previous instruments TRADITIONAL INSTRUMENTS § One shot projects § Small duration (1 -3 years) and limited scope § Support mainly based on soft loans § Low commercial risk RTD § Limited behavioral additionality and leverage of private investments National R&D&I Plan 2001 -2003: 60 K € subsidy + 116 K € repayable loans per projects Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) CÉNIT § Thematic lines of research § Long duration and bigger size § Bigger role of public subsidies § Research with more commercial risk § Bigger leverage of private funding and behavioral additionality CENIT Projects: 10 -20 Million euros per project 24

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 CÉNIT Programme: General features § Long Term Research Contractual Agreements between firms and research groups in PROs for a joint research programme § Minimum size: 4 firms (2 SME) and 2 PROs § Minimum duration: 4 years extendible § Minimum budget of the project: 5 M euros per year § Financial rules: i) Minimum contribution of private sector: 50% ii) Minimum participation of PROs and TICs: 25% § Expected Budget of the CENIT programme: 1, 000 M euros in 4 years (half private). Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 25

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 Elements of good practice (1) Implementing a sound concept of PPPs based on international experience Targeting systemic failures instead of specific sectors Applying a flexible, bottom-up approach Clear governance structure (caveats!) Ensure quality through selection criteria and processes Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 26

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 Elements of good practice (2) Long-term commitment and additionallity (trust, behavioral additionality) Clear delineations to other sources of public support Catalyst of change for setting new standards in evaluation and policy learning Diversified portfolio and broad participation Linkages and visibility Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 27

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 Challenges of PPPs instruments for RTD and innovation ins Spain Synergies and overlaps with other instruments? How many new projects? Future after the funding? Governing structures of the projects Sustainability and transformation into joint research centers Difficulties of measuring efficiency and additionality. Evaluation Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 28

OECD Symposium on Evaluating Innovative approaches to public service delivery, Madrid 30 -31 October 2007 Thanks LSanz@iesam. csic. es Or Luis. Sanz@mec. es Consejo Superior de Investigaciones Científicas Instituto de Políticas y Bienes Públicos (IPP) 29