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| Source: OECD |
More and more OECD governments are giving firms tax breaks to drive innovation while cutting their direct spending on business research and development (R&D), and are also encouraging public research organisations to commercialise their inventions, according to a new OECD report.
According to the OECD Science, Technology and Industry Scoreboard 2007, two thirds of the 30 OECD member countries offered businesses tax subsidies in 2006, up from 12 in 1995, and most have tended to make it more generous over the years.
Direct government funding financed an average of 7% of business R&D in 2005, down from 11% in 1995.
Spain, China, Mexico and Portugal provide the largest tax subsidies and make no distinction between large and small firms. Canada and the Netherlands on the whole continue to be more generous to small firms than large ones. Emerging economies, including Brazil, India, Singapore and South Africa, also offer a generous and competitive tax environment for businesses investing in R&D.
The type of tax subsidy available varies from country to country but includes an immediate write-off of current R&D spending, as well as tax relief or allowances against taxable income.
The Scoreboard notes a sharp rise in the globalisation of innovation. International co-authorship of scientific publications tripled between 1995 and 2005. Cross-border co-operation on inventions nearly doubled as a share of total inventions worldwide between 1991-93 and 2001-03.
Foreign ownership of domestic patents increased by 50% between the early 1990s and the early 2000s. European Union countries interact most often with each other and are less globalised than the United States, while Japan and Korea are less internationalised overall, the report finds.
In order to stimulate technology transfer from universities to businesses, many OECD governments have encouraged universities to patent their inventions. OECD-wide, between 1996-98 and 2002-04, the share of patents filed by universities has been stable.
While decreasing slightly, to about 7%, in the countries that pioneered such policies (Australia, Canada and the United States), the share has increased markedly in Japan and the European Union, notably in France and in Germany, although levels remain modest (1.5% in Japan, 3% in the EU, but more than 5% in France). The four OECD countries with the highest rate of university patenting are Ireland, Spain, the United Kingdom and Belgium. It is not known what share of these patents is actually exploited.
The United States, Europe and Japan remain at the forefront of world science with 30, 33 and 8%, respectively, of total scientific publications; they also lead in patenting of important inventions, as measured by triadic patents (each had 30% of the total in 2005). In per capita terms, however, Switzerland takes first place, followed by the Nordic countries, and emerging countries still lag far behind the OECD average. In terms of specialisation, patent data show that emerging economies (India, China, Israel, Singapore) and the United States focus their innovative efforts on high-technology industries (computers, pharmaceuticals) while continental Europe concentrates on medium-high-technology industries (automobiles, chemicals).
The OECD says that ICT (Information and Communication Technology) is diffusing at a more regular pace than in the late 1990s and early 2000s, as confirmed by Internet use in households and e-commerce, although the level of the latter remains modest. The penetration of broadband among households has progressed rapidly over the past three or four years in all countries but penetration rates vary. For households, Korea, Japan and the Nordic countries feature rates of 50 to 80%, while those for Italy and Ireland are around 10 to 15%. The take-up of broadband depends on computer penetration, but also on the level of competition and availability of service. Business use of the Internet has become fairly standard in OECD countries: in 25 countries more than 89% of businesses with ten or more employees have access to the Internet and over half have their own website.
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| Source: OECD |
Investment in knowledge is defined as the sum of R&D expenditure, expenditure for higher education (public and private) and investment in software. Such investment is crucial for innovation, economic growth, job creation and improved living standards. In 2004, it amounted to 4.9% of GDP in the OECD area.
The ratio of investment in knowledge to GDP is 2.8 percentage points higher in the United States than in the European Union, but the allocation of investment across the three components is similar. Investment in knowledge exceeds the OECD average in the United States (6.6%), Sweden (6.4%), Finland (5.9%), Japan (5.3%) and Denmark (5.1%). In contrast, it is less than 2.5% in Ireland and less than 2% of GDP in Portugal and Greece.
Ireland launched a plan in 20006 to become a world-class knowledge economy by 2013. Among OECD countries, R&D expenditure has grown fastest (in real terms) since 1995 in Iceland, Turkey, Ireland and Finland with average annual growth rates of over 7.5%.
In addition to new data on the rising investment in knowledge by emerging economies, this edition of the Scoreboard shows that:
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R&D spending in OECD countries has increased steadily in recent years although more slowly than during the second half of the 1990s. Total gross expenditure on R&D (GERD) grew by 4.6% annually in real terms between 1995 and 2001, but by less than 2.2% a year between 2001 and 2005.
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3.9 million researchers worked in R&D in the OECD area in 2005, of which two thirds were employed in the business sector. The share of business researchers varies widely from country to country: in the United States, four out of five researchers work in the business sector, two out of three in Japan but only one out of two in the European Union.
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The number of business researchers has grown most rapidly in smaller OECD countries, such as New Zealand, Portugal, Spain, Iceland and Greece, where their number has grown by 10% a year over the past decade. The number of business researchers in China has grown by an average of 15% a year over the past five years.
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In terms of technological specialisation, patent data show that the United States and emerging economies, notably China, India, Israel and Singapore, focus their innovative efforts on high-technology industries, such as computers and pharmaceuticals, while continental Europe concentrates on medium-high-technology industries, such as automobiles and chemicals.
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The United States has the most biotechnology firms (close to 2,200), followed by Japan and France (800 each). But the number of biotechnology patents has been falling since 2000 in most countries, after a sharp increase in the late 1990s, largely due to the more restrictive criteria applied by patent offices and the end of the wave of patenting that followed the decoding of the human genome.
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80% of Korean households have high-speed broadband access, the highest in the OECD. In 2005, Korea reported the highest surplus in the ICT goods trade balance, followed by Finland, Hungary and Japan.
