NationalSystems of Innovation(NSl)Technische UniversiteitTUEindhoveneUniversity of TechnologyEconomicsofInnovation2013
National Systems of Innovation (NSI) Economics of Innovation 2013
Coreassumption inNSl:R&D isnotenoughThe production of knowledge not sufficient to induce innovation >Lisbon agenda about 3% of R&D onGDPprovides input tosystemBut:Key point is the circulation of resources betweenenterprises.PowerofNSl=capacitytodevelopefficientmechanismstopromote the circulation of resources and its ability to access anddiffuseavailableresourcesNSl not efficient if capacity to transfer resources produced fromproviderstoconsumersisweak!Technische UniversiteitTUEindhovenUniversity of TechnologyEconomicsofInnovation2013
Core assumption in NSI: R&D is not enough • The production of knowledge not sufficient to induce innovation > Lisbon agenda about 3% of R&D on GDP provides input to system • But: Key point is the circulation of resources between enterprises. • Power of NSI = capacity to develop efficient mechanisms to promote the circulation of resources and its ability to access and diffuse available resources. • NSI not efficient if capacity to transfer resources produced from providers to consumers is weak! Economics of Innovation 2013
Definitions and elements of NSlElementsofNSlDefinitions:Knowledgeproduction(R&D)C.Freeman(1987)“..thenetworkof>innovativefirms &institutions in the publicandprivatesectorswhoseactivitiesandinteractionseducational systeminitiate,import,modifyanddiffusenewKnowledge circulation>technologies."interactionbetweenplayersR.Nelson(1993)...asetofinstitutionsS-Institutions influencingwhoseinteractionsdeterminetheinnovationsinnovativeperformance...ofnational(see also Edquist (205) ppfirms."190/191)B.Lundvall (1992)“..theelements andDynamics of NSl:relationshipswhichinteractintheProcesses oflearningandproduction,diffusion and use of new,interactionandeconomicallyuseful,knowledgeandare either located within or rootedinside the borders of a nationstate.Technische UniversiteitTUEindhovenUniversity of TechnologyEconomicsof Innovation2013
Economics of Innovation 2013 Definitions and elements of NSI Definitions: • C. Freeman (1987) “. the network of institutions in the public and private sectors whose activities and interactions initiate, import, modify and diffuse new technologies.” • R. Nelson (1993) “. a set of institutions whose interactions determine the innovative performance . of national firms.” • B. Lundvall (1992) “ . the elements and relationships which interact in the production, diffusion and use of new, and economically useful, knowledge . and are either located within or rooted inside the borders of a nation state.” Elements of NSI: - Knowledge production (R&D) > innovative firms & educational system - Knowledge circulation > interaction between players - Institutions influencing innovations (see also Edquist (205) pp. 190/191) Dynamics of NSI: • Processes of learning and interaction
Institutional actors:Educational SystemsEducationInnovationa.EuropeanInstitutionsGovernmment owned R&DandPolicyb.NationalgovernmentalpolicylabsScienceand regulationBasec.Local policiesCompetitorsBoundariesNational systemofInnovation(NSi)KnowledgeInnovativeproductionSuppliUsersFirmsersKnowledgeOligopolistic Core FirmscirculationSchumpeterian firms.InstitutionsFinancialSystemsGlobalizationTradeflowsStockexchangebasedVSForeigndirectinvestmentbank-basedSystems.Mergers andacquisitionsTechnische UniversiteitTUEindhoven.University of TechnologyEconomicsofInnovation2013
Economics of Innovation 2013 Innovation Policy Globalization Innovative Firms. Suppli Users ers Financial Systems. Education and Science Base. Oligopolistic Core Firms. Schumpeterian firms. Institutional actors: a. European Institutions b. National governmental policy and regulation c. Local policies Educational Systems Governnment owned R&D labs Stock exchange based vs. bank-based Systems. Trade flows Foreign direct investment Mergers and acquisitions Competitors National system of Innovation (NSI): Knowledge production Knowledge circulation Institutions
Historical roots ofNSl:List's critigue on AdamSmithInterdependence of intangibleand tangible capital in Friedrich List's(1841) critique of Adam Smith:“lnoppositiontothisreasoning,AdamSmith,hasmerelytakentheword capital in thatsense in which it isnecessarilytakenbyrentiers ormerchants intheirbookkeeping andtheirbalancesheets...Hehasforgottenthathehimself includes theintellectualand bodily abilitiesoftheproducersunderthistermHe wrongly maintains that the revenues of the nation aredependentonlyonthesumofitsmaterialcapital."Technische UniversiteitTUEindhovenUniversity ofTechnologyEconomicsofInnovation2013
Historical roots of NSI: List’s critique on Adam Smith Interdependence of intangible and tangible capital in Friedrich List’s (1841) critique of Adam Smith: “In opposition to this reasoning, Adam Smith, has merely taken the word capital in that sense in which it is necessarily taken by rentiers or merchants in their book keeping and their balance sheets . He has forgotten that he himself includes the intellectual and bodily abilities of the producers under this term. He wrongly maintains that the revenues of the nation are dependent only on the sum of its material capital.” Economics of Innovation 2013