Realising potentials, increasing dynamics, creating the … · Becoming an Innovation Leader Strategy for research, ... “Realising potentials, increasing dynamics, creating the

Realising potentials, increasing dynamics,creating the future

Becoming an Innovation Leader

Strategy for research, technology and innovation of the Austrian Federal Government

Preface 2

1 Taking on challenges, finding answersGetting ready to become an Innovation Leader 4

2 Developing talent, awakening passionImplementing sustainable reforms in the education system 14

3 Creating knowledge, promoting excellenceThe foundation of a knowledge-based society 18

Universities and basic research 19

Non-university research institutes 22

Research infrastructure 23

4 Utilising knowledge, increasing added valueActivating innovation potential 24

Innovation and corporate research 24

Cooperation between science and business 27

Start-ups and venture capital financing 29

Promote innovation through competition 30

5 Providing guidance, establishing frameworksEfficiently organising political governance 32

Governance structures 32

Setting priorities 35

The funding system 38

International positioning 40

Research and society 42

6 Providing incentives, creating optionsBroadening the financial base 44

Imprint 48

Table of Contents

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The RTI Strategy of the Austrian Federal GovernmentPreface

The era we live in is marked by ecological and demographic challenges, increasing

global competition and – as a result – a continuous change in the structure of

society and the economy. On top of this, we are confronted with the effects of the

international financial and economic crisis on the public budget and on the medium-

term growth potential of the domestic economy. Austria is faced with the question

of how to get the country ready for the future and how it can improve the high stan-

dard of living for generations to come.

We are convinced that one decisive answer to this question must be: by reinforcing

research, technological development and innovation. In doing so, we create high-

quality jobs, supporting long-term employment and the sustainable growth of the

economy.

Thus our objective for Austria is to push forward from the group of Innovation

Followers into the group of Innovation Leaders, i.e. to be among the most innova-

tive countries in the EU. But to achieve this goal we must have a more coordinated

political approach. We need a mutual dialogue between science, business and

society, along with a broad approach to innovation, which includes not only tech-

nological improvements but also societal, social and economic innovations. Despite

the current financial and economic crisis the federal government is still investing

considerable resources in research, technological developments and innovation. It

is, however, crucial where these funds are actually invested and how we can guar -

antee that they are used efficiently.

With this strategic plan, “Realising potentials, increasing dynamics, creating the

future: Becoming an Innovation Leader” we make a clear statement in favour of

promoting research, technology and innovation. In it, we define our strategic and

operative goals, set action priorities and lay down support measures that we need

to implement over the next decade. They will allow us to build on our strengths,

occupy new fields and niches in the future, establish transparent structures for

funding and decision-making and to ensure that public money is used efficiently

and sustainably.

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The foundation of this strategy was prepared by the Federal Chancellery, the

Federal Ministry of Finance, the Federal Ministry for Transport, Innovation and

Technology, the Federal Ministry of Science and Research, the Federal Ministry of

Economy, Family and Youth and the Federal Ministry for Education, Arts and

Culture on the basis of existing studies and involving input from the social partners

and crucial stakeholders.

We would like to thank all those who, with their contributions, have helped make the

RTI strategy an important basis for a forward-looking policy in and for Austria. Now

the time has come for us to work together with everyone involved to consistently

implement the concepts we have outlined.

Werner FaymannAustrian Federal Chancellor

Dr. Claudia SchmiedFederal Minister for Education,

Arts and Culture

Dr. Reinhold MitterlehnerFederal Minister of Economy,

Family and Youth

DI Josef PröllVice Chancellor and Federal Minister of Finance

Doris BuresFederal Minister for Transport,

Innovation and Technology

Dr. Beatrix KarlFederal Minister for Science

and Research

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1 Taking on challenges, finding answersGetting ready to become an Innovation Leader

New challenges, new goals

The gap in benchmark performance betweeninput and output quantities already hints at thechallenges that confront Austria’s innovationsystem today. In the context of the catching-upprocess, existing structures were adequate, andan imitative technology strategy that focussedon intelligent adaptation and rapid diffusion oftechnological developments was extremely suc-cessful.

Today, after the completion of the catching-upprocess, the benefits of this strategy are taper-ing off. Competition from the countries in themiddle technology segment that can offer signif-icantly more favourable pricing is also increas-ing in globalised markets. More and more coun -

In the Innovation Union Scoreboard (called theEuropean Innovation Scoreboard until 2009), theindicators compiled for innovation performanceplaced Austria in seventh place, one of the lead-ers among the Innovation Followers. The groupof Innovation Leaders, which includes the Scan - dinavian countries Sweden, Denmark and Fin -land, as well as Germany, is now within strikingdistance. The catching-up process of the pastdecades has been successfully completed.

This development helped improve Austria’s eco-nomic competitiveness in recent years, enablingthe country to achieve economic growth abovethe EU average, higher employment rates andgrowing prosperity. Measured in terms of percapita income, Austria is now in fourth place inthe EU and among the Top Ten worldwide1.

In the last two decades, Austria has managed to catch up impressively in its performance in research, technology and innovation. This undertaking was marked by a notable rise in the level of research intensity (R&D expenditures as a percentage of GDP) throughout the entire innovationsystem. Research intensity increased in the last decade from 1.94% of the gross domestic productto 2.76%. This places Austria among the top players in Europe in innovation intensity.

Source: Innovation Union Scoreboard 2010Innovation Leaders are at least at 120%, Innovation Followers at 90-120%, Moderate Innovators at 50-90% and Modest Innovators are below 50% of the EU average.

1 Source: Eurostat, figures for 2009

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tries – some in our immediate neighbourhoodas well – are going through a catching-up pro-cess too, moving up into positions that Austriaheld previously.

In the face of these challenges, Austria mustreposition itself, and that means that we mustset new goals that aim for intelligent and sus-tainable growth. We want to climb into the circleof Innovation Leaders and be among thosecountries that perform research at the frontiersof knowledge and produce at the leading edgeof technology. To do this, we must utilise the fullpotential of our knowledge-based society andstrive for excellence.

In this context, innovation performance mustcontinually improve in terms of both quantityand quality, and it must bring in noticeablyhigher profits. The prerequisite is that we makefundamental reforms and efficiency improve-ments throughout the entire innovation system.

European framework

Austria’s shift in research and innovation policyis running parallel to a new strategic orientationat the European level. The Lisbon Process hasreached its target year of 2010. The processbrought dynamism into innovation policy, butseveral expectations remain unfulfilled. With theEurope 2020 strategy, the European Union issetting new strategic initiatives oriented towardssmart (development of a knowledge- and inno-vation-based economy), sustainable (promotingresource-efficient, greener and more competi-tive economy), and inclusive growth (promotinga high-employment economy marked by socialand territorial cohesion). These developmentswill also have a significant influence on Austria’sstrategic goals.

The financial and economic crisis

These new strategic initiatives are being devel -oped against the backdrop and from the expe-

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are based on research, technological changeand innovation, training and education. Themost innovative countries in the world, such asthe Scandinavian countries, Switzerland, Ger -many and the USA, strengthened their futureinvestments in research, technology, innovationand education right in the middle of the econo-mic crisis.

This calls for the public sector to provide sup-port and vision, particularly in the context of thehighly cyclical swings to which private researchand development expenditures are subjected inthe industry sector. In Austria, where corporatecommitment to research and developmentincreased very dynamically from 2000 to 2007with a 55% rise in expenditure, there are seve-ral signs that the crisis year 2009 resulted in a

rience of the deepest financial and economiccrisis since World War II. As the Europe 2020strategy plan confirms from the outset, the crisis“has obliterated years of economic and socialprogress, and has revealed the structural weak-nesses of the European economy”.

In the face of the crisis, research, technologyand innovation assume a fundamental impor-tance as focal points of government action.Worldwide consensus has emerged that theway forward proceeds via the acceleration ofeducation, research and innovation, which arecrucial for the development potential of know-ledge-based economies. In a highly industrial-ised knowledge-based economy such as Aus -tria’s, about two-thirds of economic growth canalready be attributed to qualitative changes that

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decrease in this dynamism of investments in re -search and development in the corporate sector.The public sector behaved in a counter-cyclicalmanner in this situation: the share of federalspending on overall research financing climbedfrom 2007 to 2010 by seven percentage pointsto 35%. This allowed research intensity to reach2.76%, despite the crisis environment.

Consolidation

The aftereffects of the crisis also mean that we,like all other European governments, must con-front the difficult task of medium-term consoli-dation of public finances. At the federal finan-cing level, we are on a path of budget consoli-dation that should bring us from a 4.5% deficit in2010 to 2.5% in 2013. Education, research andinnovation are considered priority policy fieldsand therefore will be the least impacted, rela-tively speaking, by consolidation measures.Furthermore, additional funds for proactive mea-sures in this area have already been procured inthe annual amount of € 260 million from 2011 to2014. Nevertheless, the impressive track recordof growth in recent years in public investment inresearch and development cannot be sustainedduring this phase of consolidation.

During this period it will be all the more impor-tant to activate and optimally exploit the poten-tial of private research financing, and to imple-ment the structural measures that can be thefoundation of sustainable, innovation-basedgrowth. An even more expansive policy in re-search, technology and innovation should createthe prerequisites – if crisis management andconsolidation allow it – for achieving optimalleverage in the private sector and a higher de -gree of efficiency for government expenditures.

Reforms must, however, extend far beyond anarrowly defined research and technology poli-cy. Our most urgent tasks are a forward-lookingreform of the education system, improvementsin the situation for innovative firms through an

active competition policy, and improved accessto capital markets.

Research intensity 2020: 3.76%

We declared in the inaugural government state-ment that our objective was to reach a researchintensity of 4% by 2020, and we continue toview this target as part of a vision on which toorient ourselves. However, we recognise that inthe face of the financial and economic crisis, notonly will measures be necessary to consolidatestate finances and deal with the consequencesof the crisis, our research intensity target alsocannot be met. In the coming decade, we willseek to increase our research intensity by onepercentage point, from 2.76% today to 3.76% in2020. In the Europe 2020 strategy, which setsindividual goals for research intensity in the EUmember states, we have committed ourselvesto pursuing this goal.

International experience has shown us that thistrend will only be attainable if we activate pri-vate investment in research and development.Private share in the research intensity of 2020should reach at least 66% or even, if possible,as international examples show, 70%. In thecoming years, we want to stimulate firms andresearch institutions by creating a situation thatencourages innovation and promotes moreresearch. The contribution of the public sectorshould, after the necessary consolidation phasecalled for by the financial crisis and budget con-solidation in the second half of the decade,hereby be stabilised on a path where it can sup-port the research intensity with this ratio of pri-vate and public research financing.

The federal government’s strategy

The developments described here constitutethe frame of reference for the strategy on re-search, technology and innovation, which theAustrian federal government is presenting inthis document. With this document, we are

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vation leadership are a lack of interest intechnological and life science subjects, lowfemale participation rates in research, diffi-culties in integrating immigrants into the edu-cation and innovation system, a still strongbrain-drain to other countries, and relativelylow societal openness to science and tech-nology.

>> Basic research: Basic research forms theessential foundation for radical innovationsand makes it possible for society to developby expanding the frontiers of scientific know-ledge. Basic research is a core area ofgovern ment responsibility and is thereforean indispensable component of an In nova -tion Leader strategy. The proportion of basicresearch financing as a share of GDP was0.44% in Austria in 2007, lower than inimportant OECD benchmark countries.

>> Venture capital market: Due to its historicstrongly bank-biased corporate financingstructure, Austria is underdeveloped in termsof venture capital, in both early phases andexpansion phases. This complicates high-risk, growth-oriented early-phase financingfor young, innovative, knowledge-basedfirms.

>> Competition: The OECD considers the situ-ation for innovation – such as competitionand financing options – to be about ashighly effective for increasing expenditure onresearch and development as are specificinstruments, such as direct research fun-

making a clear statement for the promotion ofconditions conducive to research, technologyand innovation. The strategy plan is thus theconclusion of a multi-year process of discus-sions and analyses. The Austrian ResearchDialogue2 (2007-2008), was designed to be abroad, nationwide process of discourse andconsultations with Austrian stakeholders for thepurpose of further developing the innovationsystem and our knowledge-based society.

The comprehensive evaluation of the Austrianresearch funding system3 (“System Evaluation”2008-2009) provided a profound assessment ofthe entire system, along with recommendationsfor improvement by experts.

The Council for Research and TechnologyDevelopment made its proposals and recom-mendations for further development of theAustrian research and innovation system(“Strategy 2020”)4 in the summer of 2009.

Challenges and development potential

All this preparatory work gives us a fairly widelyconsistent picture of the pressing challengeswe are faced with and the development poten-tial the Austrian innovation system still holds:5

>> Human potential: The transition from theeducation system into the innovation systemis inadequate in Austria. Available humanpotential is not being utilised optimally. Theprimary obstacles in our path towards inno-

2 http://www.bmwf.gv.at/startseite/forschung/oesterr_forschungsdialog/3 http://www.bmvit.gv.at/innovation/forschungspolitik/systemevaluierung/index.html4 http://www.rat-fte.at/tl_files/uploads/Strategie/090824_FINALE%20VERSION_FTI-Strategie2020.pdf5 In addition to footnotes 1-3, see also: Innovation Union Scoreboard 2010 (IUS):

http://www.proinno-europe.eu/inno-metrics/page/innovation-union-scoreboard-2010, & Research and Technology Reports: http://www.bmvit.gv.at/service/publikationen/innovation/forschungsberichte/index.html

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ding. This situation could be markedly im-proved in Austria; above all, the competitiveconditions for promoting innovation in someareas, such as market entry for new pro-viders, remain inadequate.

>> Governance: Analyses and evaluations in-dicate that there are weaknesses in gover-nance structures which could hinder thefurther development of the Austrian innova-tion system in its attempt to realign its stra-tegic positioning. Root causes are primarilythe different pillars and compartmentalisedpolitical structures that do not collaborateenough, thereby preventing a systemic per-spective and making coordination within theoverall system difficult.

>> Structural change: In light of economic,environmental and societal challenges,structural change in industries that engageintensively in research, innovation and edu-cation is not taking place with the necessaryenergy.

Grand Challenges

Our innovation system, however, is also beingchallenged by major societal and economic prob -lems that we must face and find answers for inthe future. We must confront climate changeand its threatening consequences. We mustovercome global scarcities in energy and natu-ral resources, partially by converting to new andrenewable resources. We must find answers todemographic transformation and the conse-quences of an aging and increasingly intercul-tural society, thereby guaranteeing people in ourcountry a secure, healthy and high quality life.

These trends represent major challenges of aglobal stature. They imply dramatic changes inthe economy and in society. We need world-class science, research and technology to beable to formulate adaptive strategies and iden-tify development options. We also need to use

these technological advancements to build upcapacity for solutions concerning new products,processes and services.

Our strategy for research, technology and innovation there -fore pursues two main objectives:

• We want to continue developing the potentials of science, re-search, technology and innovation in Austria, to make ourcountry one of the most innovative in the EU by 2020,strengthening the competitiveness of our economy and in-creasing the prosperity of our society.

• We want to continue developing the potentials of science, re-search, technology and innovation in Austria, using them in aholistic manner to deal with the major societal and economicchallenges of the future.

Objectives

From these targets we can derive the fol-lowing additional objectives:

>> Sustainable reform of the Austrian educationsystem: Optimise framework conditions forresearch, technology and innovation; improvethe connections between the education andinnovation systems; increase the quality andquantity of human resources available inAustria for research, technology and innova-tion.

>> Strengthen basic research and its institutions:Increase funding of basic research whilesimultaneously increasing the share of fundsthat are awarded in competitive processes;continue with structural reforms of universi-ties and coordination of those performingexcellent research inside and outside the uni-versities.

>> Strengthen the innovative power of firms:Increase direct and indirect support toimprove the technological performance andinnovative power of Austrian firms; intensifyapplied research and technology transfer,

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especially among small- and medium-sizedenterprises (SMEs), as well as the suppor-ting role of leading firms; strengthen the uti-lisation of demand-side instruments in inno-vation policy.

>> Increase the efficiency of political governance:Increase the efficiency and effectiveness ofthe innovation system by means of cleargovernance structures; a modern research(funding) regulatory framework with prin-ciples for results-oriented funding allocationand improvement of planning reliability for allactors.

Principles

With our strategy for research, technology andinnovation, we as the federal government areestablishing the guiding principles of our politi-cal activity in education, research and innova-tion policy for the coming years. This will alsohave a long-term effect on competition and fun-ding policy.

The government administrative offices will drivethese principles forward, coordinate them, andmonitor the entire process to ensure the furtherdevelopment of the strategy.

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We must keep the following principles inmind:

>> Instead of an exclusive focus on promotingscience and technology, a comprehensiveapproach to innovation policy is being pur-sued that includes not just financial supportmeasures, but also legislative and organisa-tional measures in such areas as education,competition, regulation and procurement.

>> A systemic approach must be pursued thatsupplements different measures and cre-ates synergies. Collaboration and coordina-tion are essential maxims for action. Beforesetting new initiatives, we evaluate whetherexisting activities can be reoriented, re-bundled or reformed.

>> It must be ensured that funds are efficientlyand effectively used via improved regulationand constant monitoring, as well as throughshared usage of research institutions andinfrastructures. All measures are orientedfirst and foremost in terms of their impact.Initiatives and programmes that do not leadto the desired impact will be shut down orfundamentally reformed.

>> Excellence in basic research on the one handand top-flight corporate research on theother are supported as much as possible.This requires disbursing a higher share offunds through competitions and renewing ourefforts to encourage high-risk projects.Prioritisation and support in the interconnec-tion of international research structures andexcellence networks help strengthen Aus tria’simage.

>> National innovation system actors are fullyintegrated in globalised developments ofscience and technology and can profit opti-mally from the relevant EU programmes.

>> There is a high leverage effect in public in -vestments triggering the greatest possibleinvestments from the private sector with thelong-term goal of attaining a share of two-thirds to 70% of private funds in overall re-search and development expenditures.

VISION AUSTRIA 2020 – AN INNOVATION LEADER

• In 2020, Austria will be an Innovation Leader.

By 2020, Austria will be solidly established among the EU’s most innovative countries and con-sidered one of Europe’s Innovation Leaders. Austria will be a top location for research, technolo-gy and innovation, offering excellent researchers outstanding work and career opportunities andattracting research institutions and highly innovative firms from all over the world. Excellent re-search and radical innovation will be normal in Austria, as will be the close collaboration betweenscience, business and society. An overall policy perspective related to science, research and inno-vation will help to strengthen the three sides of the “knowledge triangle” (education, research andinnovation) and to improve collaboration between them.

• Human potential and skills will be optimally developed and used.

The education system will promote in particular innovative and creative thinking and action.Access to the education system, and its permeability, will have fundamentally improved in termsof performance fairness and equality of opportunity, as well as in the choice of university subjectsand careers that fit individual abilities and preferences. Interest and motivation for technical andlife-science-related training will be comprehensively promoted. In addition to encouraging age-appropriate, early childhood pedagogy and the best possible detection of existing potentials in alllevels and within all school types, relevant educational institutions will have established a solid,improved education and training system for teachers. The immigration of highly skilled people willbe encouraged and utilised.

• Excellent situation for universities, universities of applied sciences, andnon-university research institutes will form the basis of the innovationsystem.

Universities, universities of applied sciences, and non-university research institutes will workwithin excellent framework conditions and be sufficiently financed to optimally perform their tasksin research and instruction. Attractive scientific careers at the international level will be the preva-lent standard at Austria’s universities. The universities will receive support to conduct basic re-search at the highest level and educate outstanding graduates. Well-established research infra-structures at universities, universities of applied sciences and non-university research instituteswill promote both top performances in research and be the basis for successful cooperation be-tween science, business and society.

• Innovative firms will ensure the prosperity of a modern knowledge-basedsociety.

New to market innovations and increasing exports of cutting-edge technology, high-tech productsand knowledge-intensive services will make Austrian firms a recognised world market leader inknowledge-intensive industries and services. The share of Austria firms that systematically con-duct research and innovation will be among the highest in Europe. Optimal framework conditionswill favour the constant improvement of innovation performance in the corporate sector. Moderncompetitive regulations will guarantee an intense competitiveness and innovation ability among

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firms. Public procurement and an innovation-oriented infrastructure policy will increase thedemand for innovative products and knowledge-intensive services. The start-up dynamic amongtechnology-based and innovative businesses will be high. With a well-functioning market forprivate equity and venture capital, young and innovative firms will be able to grow quickly andcreate future-proof jobs.

• A customised funding policy will support the performance of the innovationsystem.

A committed funding policy that is oriented towards efficiency, quality and effectiveness willaddress priorities and set the proper economic accents. This will guarantee longer-term securityin planning and financing, providing quick support to innovation system actors and the maximumpossible leverage effect with a fine-tuned mix of direct and indirect support measures. In the areaof the direct funding system, clear, bundled competencies and unambiguous governance struc-tures will be established, Indirect (tax) concessions for research activities will be significantly sim-plified. There will be clear priorities that are backed up with a flexible mix of instruments. This willhelp guarantee the increased output orientation of the entire innovation system.

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2 Developing talent, awakening passionImplementing sustainable reforms in the education system

study at a university or university of appliedsciences; the OECD average is 56%.

Findings come together in the following overall picture

The Austrian education system distinguishesvery early on between vocational and academicpaths; access to education is strongly influ-enced by social stratification. Due to a lack ofpermeability of educational paths, this earlyselection phase has a decisive influence on theeducational expectations of children and ado-lescents, and it is almost impossible to changecourse later. The young age at which the choiceis made has negative consequences includingdrop-outs and frequently a poor choice of studyor career.

The available potentials and major qualifica-tions of immigrants are not being developed toa great enough extent, nor are they being usedenough in science and business. Immigrantsalso often have extremely poor education levelseven in the second and third generation.Language barriers impede access to education.

In the life sciences and technical disciplines, thegap is widening between the economy’sdemand for skilled workers and youths’ interestin training. The situation is aggravated by demo-graphic developments; by 2020, we can expecta strong drop in the number of 15- to 19-year-olds in the population pyramid.

New, creative and attractive approaches inpedagogy, especially in the technical and life

The education system is thus an essential com-ponent of the innovation system; it plays a pre-eminent role in the system’s prospective devel -opment. This significance increases the closerwe get to our ideal of being a knowledge-basedeconomy in which knowledge is the most impor-tant factor in competition. Dealing with the po -tentials to and obstacles of development in theeducation system today must therefore be anintegral component of any strategy aimed atimproving research, technology and innovation.

Status and challenges

On the whole, Austria’s education system stillhas a good reputation. International rankingsshow that Austria, as a place to conduct busi-ness, gets very good ratings for education, flex -ibility and employee motivation. In the face ofchallenges brought on by a knowledge-basedsociety and the conditions of global competi-tion, however, it is becoming increasingly clearthat the education system needs fundamentalreform and new approaches.

The findings of numerous studies and interna-tional benchmarking suggest that the Austrianeducation system is not exploiting its full poten-tial. Only 39% of an age group in Austria ac-quire a university entrance certificate (through aschool-leaving examination); the OECD aver-age is 61%. With an academic ratio of 34.6% –defined as the proportion of people with tertiaryor equivalent post-secondary education in the30-34-year-old resident population – Austria isbelow the EU average of 38%. In Austria, only43% of each age group enrol in a course of

Education is the foundation of knowledge-based economies and makes an essential contribution tothe social and economic development of our society. Skills are crucial for the development potentialof our community and the robustness of our democratic institutions. Yet skills also determine theability of firms to develop and implement innovations, thereby affecting the economy’s competitive-ness. The quality of human potential determines the quality of research, which in turn creates newknowledge and is the prerequisite for new understanding, and for adapting and applying new techno-logies and research that have been developed elsewhere.

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science subjects, have not yet been sufficientlydeveloped in our current education system. Inaddition, a clear gender imbalance in technical-and life-science-related studies on the onehand, and language- pedagogical studies onthe other, is leading to a “feminisation” or “mas -culinisation” of entire professional fields.

The situation in university teaching, and espe-cially the amount of time professors have perstudent, is particularly unfavourable in interna-tional comparison, which exerts a negative in -fluence on the rating of Austrian universities inuniversity rankings. The widely disparate num-ber of students headed into the different univer-sity courses results not only in different studyconditions at university, but also in disparateopportunities on the job market.

A lack of scientific career options dampens theincentive for talented students to pursue acareer track that leads into research or universi-ty. Only a fraction of doctoral students whostudy in Austria find a position appropriate totheir skills, or at least a third-party-financed po -si tion, at university. Intersectoral mobility be-tween basic research, applied and industrial re -search needs major improvement, as this posesan additional career obstacle.

The proportion of women in the entire highereducation sector and in non-university researchinstitutes sinks markedly after the doctorate.Industrial research has the lowest proportion ofwomen in Europe. Many women give up facedwith the primarily masculine conditions pre-vailing in this sector.

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• We want to promote the talents of people in all levels of education, awaken their passion for research, and facili-tate the best possible training for business dealings and scientific research. This should guarantee universities, re-search institutions and firms a sufficient pool of highly qualified researchers.

• To do this, the entire education system must be optimised, from the early childhood phase to models of lifelonglearning.

• These reforms attempt to mitigate social selectivity, to improve permeability between education courses and tracks,to implement thorough quality improvements in school and university instruction, to better integrate immigrants,and to balance out gender discrepancies in research.

• The portion of drop-outs should be reduced to 9.5% by 2020.

• The portion of pupils graduating with a school-leaving certificate for an age cohort should be raised to 55% by2020.

• Among the pupils whose first language is not German the share of those who do complete upper secondary schoolshould increase from 40% to 60%.

• The conditions of study at universities should be fundamentally improved, which will require establishing newfinancing models for higher education.

• The proportion of 30- to 34-year-olds who have completed a university degree or have an equivalent educationalcertificate should be increased to 38% by 2020.

Objectives: Education system

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Support measures

Structural reform of the education system

>> Improve early support programmes with anobligatory and free year of kindergarten(half-days) for five-year-olds

>> Increase the number of full-day schools andexpand need-based full-day child care

>> Expand the vocational diploma programmefor apprentices and the vocational school-leaving examination for adults as a course ofstudy

>> Introduce Austria-wide educational standardsand partially standardised final examinations

>> Further develop the school system in termsof better individual support and an increasein permeability, especially in lower second -ary school

>> Strengthen human potential in the areas ofmathematics, information technology, lifesciences, and technology through targetedfunding in (pre-)school education and at uni-versity institutions

Improve educational transitions

>> Expand career orientation and study advisingin schools (such as a study checker (“Stu -dien checker”) or trial studying (“Studierenprobieren”))

>> Establish flexible study entry phases in alldiploma and bachelor’s programmes

Improve quality assurance and qualityenhancement of higher education institutions

>> Develop an “Austrian model” for future distri-bution of financing to universities based onstudent-related functions (teaching) and re-search

>> Improve supervisory relationships betweenstudents and faculty

>> Develop indicators for improving quality ofteaching in higher education

Improve integration programmes

>> Increase hiring of teachers whose firstlanguage is not German, and interculturalemployees

>> Offer more language teaching>> Design flexible recognition and equivalence

validation of diplomas and other degrees

Increase mobility

>> Targeted increase of mobility among stu-dents and graduates in selected countries

>> Expand exchange programmes for pupils,students and teachers at all levels with re-search-, technology- and innovation-intensivefirms and abroad

Improve conditions for researchers at universities

>> Make awarding of permanent positions atuniversities transparent and performance-based

>> Improve collective agreements and theUniversity Act concerning the tenure-tracksystem (implement a career model withoptions for unlimited employment, depen-dent on performance evaluations)

>> Increase support for doctoral candidates andpost-docs by expanding structured pro-gramme offerings

Strive for gender equality in research

>> Include gender-specific budgeting measuresin all research support

>> Establish individualised support measures forwomen studying to become scientists

>> Support measures for improved compati-bility between career and family

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3 Creating knowledge, promoting excellenceThe foundation of a knowledge-based society

where the research is carried out. Seventy percent of basic research is performed at tertiaryeducation institutions. Since the Universities Act2002 conveyed autonomy to universities, theyhave been involved in dynamic and complexdevelopment processes. Autonomy opens upopportunities and tasks universities with raisingtheir profile. However, their ability to do so isdefined primarily by their disposable financialresources. Universities are in constant globalcompetition to attract the best and the brightestminds for their research. Their appeal to excel-

Basic research is a key area of the govern-ment’s responsibility in research and innovationpolicy. In common with all highly developedindustrialised countries, basic research inAustria is also funded overwhelmingly by thepublic sector. Therefore basic research plays amajor role in the federal government’s strategyfor research, technology and innovation.

The ability of basic research to fulfil its goal inthe innovation system depends considerably onthe quality of the site – primarily universities –

Basic research is driven by curiosity, expands the frontiers of scientific knowledge and creates a reservoir of new knowledge that can lead to radical innovation. It represents one of the major pillars of the innovation system. Its significance as a location factor in knowledge-based economiesgrows the closer we approach the front lines of technological development and socio-economicinnovations.

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lent researchers from both inside and outsidethe country will be a crucial factor of the humanpotential throughout the research locationAustria.

Non-university research institutes are also in-volved in this global competition for top talent.Whether traditional institutions, such as theAustrian Academy of Sciences, or new institu-tions founded in recent years, such as theInstitute of Science and Technology Austria(IST-Austria), they fill in the research landscapearound the universities. The strategic objectivefor basic research in Austria is to create a pro-ductive relationship balancing competition andcooperation among these excellent researchinstitutions.

The promotion of collaboration between sci-ence and business since the 1990s has givenrise to a broad spectrum of successful institu-tions alongside universities and firms. Thesenew sites of collaborative research enrich theresearch landscape: the COMET programme’sCompetence Centers for Excellent Techno -logies, the Christian Doppler Research As -sociation and its laboratories (CDG), the LudwigBoltzmann Gesellschaft (LBG) and the insti-tutes of Austrian Cooperative Research (ACR).The Austrian Institute of Technology (AIT),which was recently strategically repositioned,represents a cornerstone of research orientedtoward the business sector. All of these organi-sations form an important segment in a diversenon-university research scene with differentinstitutions.

The quality of research, however, is also deter-mined by the quality of the available infrastruc-ture. “State of the art” research, and along withit the dynamic development of our knowledge-based society, require researchers to haveaccess to competitive equipment and infrastruc-ture at their institutions. The shared use of

major research infrastructures among firms,universities and non-university research insti-tutes is an essential option.

UNIVERSITIES AND BASIC RESEARCH


In international comparison, basic research inAustria – both in terms of monetary inputs andoutputs (publications, quotations, etc.) – islocated in middle field; however, it is laggingbehind the global benchmarks, such as the USAand European reference countries. The propor-tion of financing for basic research as a share ofgross domestic product was 0.44% (accordingto the last complete survey in 2007), which waslower than in important OECD countries.

In the context of the successful catching-up pro-cess that Austrian research has completed inrecent decades, the public sector has signifi-cantly increased its expenditures on researchand development. Financing of basic research,however, was comparatively static. From 2002to 2007, public expenditure on corporate re-search grew from € 404 million to € 598 million,or by 48%, whereas expenditures for academicresearch – which go primarily to basic researchin Austria – increased from € 1,157 million to €1,446 million, or by 25%.6

Academic research in this context refers to theresearch conducted at universities and otherinstitutions in the tertiary sector, including suchinstitutions as the Austrian Academy ofSciences, IST-Austria and the AIT.

Nevertheless, Austria has built up substantialresearch capacity of international elite quality,such as in materials physics, quantum physicsand the life sciences, as well as in the humani-ties, social sciences and cultural studies. This isreflected in the successful participation of many

6 According to figures from the Austrian Institute of Economic Research (WIFO) and Joanneum Research

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Austrian-based scientists in EU FrameworkProgrammes and the first calls for proposalsfrom the European Research Council. We muststrengthen this foundation of excellent basicresearch. At the same time, we must constantlywork on further developing this potential intonew fields with promising perspectives.

With the Austrian Academy of Sciences’ newlycreated research agencies – the Institute forMolecular Biotechnology (IMBA), the GregorMendel Institute for Molecular Plant Biology(GMI), and the Research Center for MolecularMedicine (CeMM) – and the improvement ofexisting academy institutes, as well as the foun-ding of IST-Austria, Austria has establishedseveral new instruments for building up excel-lent research. Together with the universities,these institutions could form the nucleus ofexcellent research done in Austria; we mustwork to upgrade and expand this, solid corethrough the promotion of networking, the con-struction of shared infrastructure, and fine-tuned human resources policy. We must there-fore adapt the structures of the AustrianAcademy of Sciences to meet these new re-quirements.

In this context the growing international compet -itive pressure on top researchers representsone of the greatest challenges. The ExcellenceInitiatives in Germany, which provide elite uni-versities with significantly better funding, forinstance, are creating a strong brain drain effecton top research personnel. Austria must pro-mote the excellence segment of its own basicresearch to establish and expand the attractive-

ness of this research location for top research -ers, and thereby Austria’s position. On the otherhand, we must improve the international visibil -ity of basic research in the university sectorthrough appropriate personnel, financing andinfrastructure conditions.

In order to do this, we must further strengthencompetition-oriented financing in universityresearch. Third-party funding via researchprojects of the Austrian Science Fund (FWF)that have been evaluated in competitions,signals a stronger orientation on quality.Corresponding to the international trend,funding of overhead costs for research is takeninto account. An overhead premium for re-search projects acquired through competitionis a goal-oriented and unbureaucratic way tosupport evaluated research achievements andstrengthens the position of researchers at uni-versities and other institutions.

The autonomy of Austria’s universities makesthem strong, independent partners for imple-menting strategic goals related to research poli-cy. This partnership is defined within the legalframework of the Universities Act and is sub-stantiated in the multi-year performance agree-ments between public sector financing andautonomous universities.

For the implementation of this research strate-gy, it is essential that performance agreementsprovide clear stimuli for universities to encour-age strategic orientation and strengthen coop-eration among universities to ensure efficientutilisation of all available resources.

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Support measures

>> Develop an “Austrian model” for future distri-bution of financing to universities based onstudent-related functions (teaching) and re-search

>> Expand third-party financing of universityresearch via Austrian Science Fund (FWF)projects evaluated in competition, with lump-sum coverage of 20% of overheads

>> Implement an Austrian excellence initiative, bycreating up to ten Clusters of Excellence by2020

>> Develop performance agreements into an in -strument for better coordination of research

• We want to increase investments in basic research by 2020 to the level of leading research nations.

• We want to improve basic research by implementing further structural reforms in the university system.

• The university financing model should be reformed. Research financing should become more competitive andproject-based.

• University research financing, in the form of third-party funding from the Austrian Science Fund (FWF) via com-petitive applications, must be strengthened and given appropriate financing.

• The establishment of individual profiles of universities should be supported by creating Clusters of Excellence.

• The orientation of teaching and research topics at universities, and the collaboration with non-university researchinstitutes, should be better aligned with an overall strategy.

Objectives: Universities and basic research

topics among universities and for promotingcollaboration with other research institutions

>> Refinance the infrastructure acquired before2004, based on an inventory survey and par-tially finance new infrastructures for coopera-tion between university and non-universityresearch institutes

>> Reform the structure of the Austrian Academyof Science by creating a development plan,concluding performance agreements, andintroducing modernised financing and liquiditymanagement

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NON-UNIVERSITY RESEARCH INSTITUTES


In addition to the university sector, Austria hasestablished a diverse and differentiated land-scape of non-university research institutes intowhich approximately one-third of public expen-diture on research and development flows.These institutions are an essential pillar ofAustrian research, providing important stimuli,especially in research that serves social deve-lopment and innovations in the corporate sector.

• Develop clear role models along definedperformance goals for various institutions inthe non-university research sector

• Internal research institute structures shouldbe strengthened through reforms and ad -justed to new requirements.

• The overall structure of the non-universitysector should be optimised to improve co-ordination.

Objectives: Non-university research institutes

Thus, a wealth of different structures – in termsof responsibility, financing forms, mission,management and degree of scientific methods– have emerged from various development con-texts. So far, there have hardly been any basicempirical surveys on their role and their effecton the innovation system.

Diversity and regional distribution promises flex -ibility, creativity and competition, yet it alsoleads to a structure dominated by small units,with high fixed costs and inefficient parallelstructures. Often, the means for building uplong-term competence are not available.Consequently, several non-university researchinstitutes do not have a clear picture of theirrole.

Efforts are underway, and should be intensified,to strengthen collaboration and share profilebuilding between universities, universities ofapplied science, and firms, as well as betweenuniversities and non-university research centresin applied and basic research (cf. Chapter 4). Atinstitutions of applied research – such as AIT,ACR and Joanneum Research – a comprehen-sive reform and strategy process was and isbeing conducted, and should be continued.

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Support measures

>> Reform the structure of individual institutionsand further international and strategic posi -tion ing of the Austrian Institute of Technology(AIT)

>> Finance non-university institutions with tem-porary performance agreements and subsi-dy contracts based on criteria such as publi-cations or patents

>>Flexibly shape research structures with stim -uli for the (re-)integration of non-universityinstitutions into universities or other, largerresearch structures

>> Create non-university research structuresprimarily in the form of temporary institutions

>> Reform and standardise the regulatory frame-work by redrafting the Research OrganisationAct (FOG)

Support measures

>> Develop a binding “national roadmap for re-search infrastructure”

>> Provide stimuli for networking infrastructuresto achieve critical mass, such as financing oflarge infrastructures linked to concepts of co -ordinated usage (such as high-performancecomputers)

>> Expand cooperation of research institutionsand firms on the basis of a shared infra-structure

>> Austrian participation in European and inter-national infrastructures in the context of theESFRI roadmap

>> Develop a regulatory situation for using infra-structures such as biobanks and statisticaldata bases

RESEARCH INFRASTRUCTURE


A competitive infrastructure at research institu-tions, and access to international infrastruc-tures, is an indispensable prerequisite for acompetitive research location. According to usersurveys conducted for the System Evaluation,however, the availability of and access to re-search infrastructures represent, after humanresources, the second greatest bottleneck forthe development of research in Austria.

Both research institutions and firms agree onthis point. Expanding Austria’s infrastructureand synchronising it with international elite stan-dards is therefore a major challenge.

Thus far, signs of a coordinated, shared pro-curement and use of infrastructures are onlyfound in high-profile cases where the visibility ofinvestments is already high enough. The effi-ciency and effectiveness of funding allocationrequires the coordination of infrastructure pro-

• We want to expand research infrastructures in Austria as thefoundation for excellent research and to internationally posi-tion Austrian research in a coordinated manner.

• The development of research profiles of universities and non-uni-versity research institutions as hubs of research infrastructurestrives to guarantee optimal coverage, synergies as well as in-crease existing strengths.

Objectives: Research infrastructure

curement and use on the basis of a nationalover view of the research sector.

Furthermore, future participation in pan-Euro -pean infrastructures is of decisive importancefor Austria’s competitiveness as a place to doresearch.

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4 Utilising knowledge, increasing added valueActivating innovation potential

INNOVATION AND CORPORATERESEARCH


The international comparative data from theEuropean Innovation Scoreboard (and its latestadvancement: the Innovation Union Score -board) document an impressive catching-upprocess that Austria has completed over severalyears, improving its performance in research,technology and innovation and leading toAustria’s position right behind the top nations.

This catching-up process was driven by, amongother things, a significant increase in researchand development expenditures from both thepublic and the private sector. Expenditures inthe Austrian corporate sector have more thandoubled in the last ten years, up to € 3.38 billionin 2010. Furthermore, financing from abroadreached € 1.17 billion in 2010, including thereturns from the EU research framework pro-grammes.

Nevertheless, the share of value added in cor-porate-sector industries focussed on research,technology, education and science is still deve-loping too slowly in international comparison.

Incentives to increase efforts in innovation canbe implemented at the supply side, promotingtechnological developments. Austria has prima-rily followed this approach in the catching-upphase. But essential stimuli for more innovationcan also come from the demand side. The waypublic procurement is handled, setting norms,defining standards and regulatory frameworksfor economic actors can all have a decisiveinfluence on the demand for innovative solu-tions and the size of the markets for innovativeproducts.

The competition policy framework is also a cru-cial criterion for an economy’s innovation power.Support measures for intensifying competition –especially in sectors previously shielded frominternational competition – can significantlyboost innovation efforts. International compari-son figures suggest that Austria still has consid-erable potential for intensifying competition.This was also confirmed in the results of theSystem Evaluation. The System Evaluation alsoshowed that there is still potential for furtherreducing the time and costs for starting a busi-ness.

As a high-income country, Austria can only secure and expand its competitiveness and quality as alocation to the extent to which the transformation to a knowledge-based economy takes place. Theprerequisite is an on-going intensification of the transfer process from science to the economy:newly created knowledge must find a shorter path to utilisation. This means substantially increasingthe scope and level of innovations that are developed and implemented in Austria. Increasing numbers of Austrian firms should develop technological or market-oriented competitive advantagesthrough innovation so they can become market leaders in global competition, creating economicgrowth and jobs. To do this they will need to intensify more ambitious research and developmentactivities in firms performed by highly skilled employees on the foundation of the latest scientific findings. This is why increasing the performance of the innovation system is one of the fundamentaltasks in a strategy for research, technology and innovation, which will make Austria an InnovationLeader. We must adopt a broad approach to innovation that not only includes technological, research-driven and non-technological innovations in manufacturing and in the service sector butalso ecological and social innovations as well as innovations in the public sector.

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Innovation potential has not yet been fully real-ised, above all regarding the output targets. Thiscan be seen in below-average performance offirms in innovations that are new to the market,in a low share of knowledge-intensive services,in a comparatively low technology content inexport products and services, and below-aver-age shares of employment in the medium- andhigh-tech sector of manufacturing.

Yet there are also deficits on the input side.Despite highly dynamic developments in recentyears, financing from industry still has a toosmall share of gross domestic expenditure onR&D. In 2010, the ratio of public to privateinvestments in research and development wasat 43 to 57 per cent, thereby deviating signifi-cantly from the targets of the Lisbon Process byone- to two-thirds. This is why we must make aspecial effort to further increase corporate re-search.

So our challenge now is to keep the innovationsystem on its dynamic path of development. Weneed to activate all of the innovation system’spotentials. This requires a strategic bundle ofmeasures that go beyond a narrowly definedtechnological, supply-side innovation policy: itincludes demand-side measures, such aspublic procurement and a competition policythat stimulates innovation.

If the demand for innovative products and ser-vices in Austria – e.g. through public procure-ment – increases, then not only will the qualityof publicly created infrastructure and servicesimprove; rather, reference markets for Austriantechnology firms will also grow, which can againencourage corporate research and develop-ment.

Austrian innovation policy, however, is still toofocussed towards a narrowly defined concept ofhigh-tech innovation that does not focus enoughon non-technological aspects such as organisa-tional innovations, service concepts and new

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tional quality plays an important role in researchfinancing. A multinational corporation’s decisionas to where to locate a research centre is basedupon several factors.

In addition to generally important elements suchas taxation and political and legal stability, firmsalso place great emphasis on such factors asthe availability of skilled employees the protec-tion of intellectual property, and the local pre-sence of universities and faculties that spe-cialise in science and engineering.

In the area of human resources, Austria howev -er is experiencing an increasingly critical bot-tleneck that must be overcome. A taxationsystem that keeps costs low for research devel -opment is not decisive, but it can, ceteris pari-bus, like the range of direct subsidies, positive-ly influence decisions about where to locate aresearch facility.

business models. In this context the increasingimportance of users and consumers in devel-oping innovative products and services mustalso be taken into account.

The focus here should expand upon theAustrian economy’s strengths and on the struc-tural improvement of the Austrian manufactur -ing and service sectors in the direction of higherresearch and knowledge intensity; the expan-sion of innovation activities at all firms, espe-cially in small- and medium-size enterprises(SMEs); stronger exploitation of the potential ofcrea tive industries; substantial increases in thelevel of innovation; and a significant improve-ment in financing by mobilising private equityand venture capital.

Due to Austria’s strong dependence on interna-tional corporate parent companies for corporateresearch and development investments, loca-

• We want to enhance domestic value creation by encouraging research intensive industries and knowledge inten-sive services. In the process, we want to stimulate innovations through a strong emphasis on demand-side instru-ments in public procurement, regulation and standardisation.

• The number of firms that systematically conduct research and development should be increased between 2010and 2013 by a total of 10% from 2700 and by a total of 25% by 2020.

• The role of internationally successful Austrian leading firms as a central pillar for the innovation system should bestrengthened and the research and innovation potential of small and medium enterprises should be activated.

• Austria’s attractiveness as a location for research and technology intensive firms has to be increased further.

• The innovation level of firms has to be raised by expanding the share of radical innovations that are new to themarket.

• The structure of the manufacturing and service sectors has to be improved by increasing the innovation and know-ledge intensity of firms.

Objectives: Innovation and corporate research

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Support measures

>> Expand direct funding and its optimal coordi-nation to include indirect funding for activat -ing and increasing both corporate researchand innovative performance among firms

>> Stimulate innovation through demand sidemeasures, especially via increased use ofinnovation-friendly approaches in procure-ment processes (such as competitive dia-logue or functional service description

>> Intensify innovation in the public sector (suchas energy efficiency in public buildings, e-governance, e-health) and in public infra-structures

>> Improve the situation for, and intensify effortsto attract additional research-intensive firmsand expand headquarter functions

>> Implement an innovation-oriented infrastruc-ture policy, e.g. via innovation-friendly publicprocurement and high-tech investments indomestic infrastructure, while at the sametime supporting technology firm exports

COOPERATION BETWEEN SCIENCE ANDBUSINESS


In the 1990s, the low amount of interaction be-tween science and business was identified asone of the critical deficits in the Austrian inno-vation system. Since then, cooperation betweenuniversities and firms has fundamentally im-proved. Interventions via research and techno-

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more knowledge and research intensity, and theincreases in innovation can only be attainedwith a stronger utilisation of the (scientific) re-search base, easier access (also for SMEs) tosources of knowledge, and rapid utilisation ofresearch and development results. However,knowledge transfer requires that appropriateentrepreneurial and content-based competen-cies in innovation and knowledge managementexist, both in firms as well as in science andresearch institutions.

logy policy (such as the Competence CentrePro gramme, the Christian Doppler ResearchAgency, and the Bridge and COIN programmes)have made a difference, as has the UniversitiesAct of 2002. As a result, Austria is now amongthe international leaders in cooperation intensi-ty between science and business. In order toprotect these gains, we must now continue tooptimise support measures and adjust to shift -ing situations. Because the structural improve-ment of Austrian business in the direction of

• We want to increase the cooperation intensity of Austrian firms and strengthen the strategically oriented collaborationbetween science and business – with a special focus on excellence and sustainability.

• This means that we must reduce barriers and hindrances among firms, especially SMEs, for cooperating withscience/research facilities, and make it easier for innovative firms to access external resources.

• This will allow more firms to expand their technology leadership and attain top positions in innovation.

Objectives: Cooperation between science and business

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Support measures

>> Further develop support measures for re -search cooperation, networks and strategicalliances with a focus on excellence andsustainability (such as COMET, Bridge,COIN) and models for thematically focussedbasic research (such as CDG)

>> Strengthen the leverage and transfer func-tions of clusters and intermediaries

>> Identify areas of strength for bundling re-sources and tapping synergies, and supportdevelopment in leading topics in researchand development (between industry andscience/research)

>> Support the “linking” of Austrian firms andscientific research institutions to EU andinternational programmes

>> Support firms in securing and enforcing in-tellectual property and its implementation

>> Expand initiatives for strengthening humanresources in the area of applied research,and for improving intersectoral and interna-tional mobility

START-UPS AND VENTURE CAPITALFINANCING


Finally, research, technology and innovationpolicy is also measured by its contribution toaccelerating structural transformation. Austria’sinnovation system still has clear deficits in thisarea.

The early-stage dynamics of technology-basedand innovative firms still have high developmentpotential. According to estimates from theCouncil for Research and Technology De -velopment, only 5-10% of approximately 30,000annual start-ups are knowledge-intensive, tech-nology-oriented firms. The proportion of young,fast growing firms is significantly below averagein international comparison.

The weakly developed venture capital marketin Austria (especially in early-phase investment)is causally linked with this fact. In Austria,financing structures are traditionally orientedtowards loans, which tends to prevent financinghigh-risk innovation activities. Specific chal-lenges must be overcome to strengthen equitycapital financing of research and developmentinvestments. In international comparison withEurope’s most innovative countries, Austriashows significant weaknesses in this respect.

As the Innovation Union Scoreboard shows, theshare of venture capital in Austria in 2009 stoodat 0.03% of GDP, far behind leaders such as theUnited Kingdom (0.26%), Sweden (0.23%) andFinland (0.15%).

What is needed here above all are two things:first, to guarantee legal security in the area ofinvestment companies by creating modern,internationally competitive legal conditions; andsecond, to establish role-models (profitablefunds as a success story for other investmentcompanies and investors).

The public sector can play an important role aslegislator and cornerstone investor. Institutionsassociated with the public sector assume therole of an investor in a private investment fund,thereby signalling to others trust in the manage-ment and business strategy.

Despite positive developments on the market-place in recent years, not as many companiestake advantage of going public as in top inno-vation countries. While Austria’s stock ex-change has a market capitalisation of about18.4% of GDP, top countries like Switzerlandare at 176%. Even if we consider that traditionalstock exchanges, such as New York (79.4%),London (69.4%) and Tokyo (66.4%) are notrepresentative for Austria, the gap betweenAustria and countries such as Finland, Swedenand Denmark (46.4%) and Israel (53.3%) issignificant enough.

PROMOTE INNOVATION THROUGHCOMPETITION


The intensity of competition is assumed to havea major influence on innovation activity. Thecore of entrepreneurship is the firm founders’endeavour to improve their financial position byconstantly seeking out innovations. This is theengine of economic growth and social transfor-mation. The task of competition policy is to pro-vide entrepreneurs with a challenging yet fairenvironment in which they can manifest theiropportunities and have a successful future. Theprimary goals of competition policy are to inten-sify innovation activity and achieve efficiencygains.

The connection between competition and inno-vation is not linear; instead, it depends on in-dustry-specific elements and market factors.Working out shared standards has the advan-tage that it ensures competition in the marketbetween manufacturers of products who usethe same norms. On the other hand, there is adanger that norms create barriers to marketentry, leading to new impacts that hinder com-petition. This is why a applied innovation policymust resort to sector-specific support meas -ures. When forming research clusters, we mustensure from the start that competition is notexcluded.

In some industries, especially in the servicesector, Austria lags in competition intensitywhen compared internationally. For this reasonwe must make it easier to form an enterprise,e.g. by lowering the administrative costs andshortening the time it takes. We must alsoimprove market entry regulations in terms ofeducation requirements and licensing. A high-quality system of commercial legal protectionsplays a decisive role in ensuring steady techno-logical progress and innovations in our domes -tic economy.

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Support measures

>> Create a regulatory framework to strengthenequity capital in young firms that are orientedtowards technology and growth

>> Expand venture capital initiatives to stimu-late early-phase investment, taking previousdevelopments into account

>> Optimise and complete existing supportmeas ures for forming technology-based andinnovative enterprises, focussing above allon measures for the start-up phase (cf. pre-seed, seed financing, business angels, tech-nology marketing, etc.)

>> Strengthen finance competence and entre-preneurship at universities, including theestablishment of knowledge transfer centres

>> Develop new financing models with venturecapital investment for realising universityintellectual property rights (IPR), and estab -lish university-related venture investmentcompanies

Due to subpar market conditions in the stockexchange, venture capital and private equitysegments, Austria’s firms, and especially herinnovative entrepreneurs, lack crucial sourcesof financing for research and developmentinvestments. This must be addressed with legis-lative measures.

• We want to substantially increase the intensity of private equityand venture capital in the formation of technology-based, inno-vative firms.

• The number of knowledge- and research-intensive new start-ups should climb annually by an average of 3% until 2020.

• The growth of innovative firms should be accelerated.

Objectives: Enterprise formation

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Improving the system of fulfilling competitiveregulations also makes a decisive contributionto ensure that competition functions in all mar-kets. The Austrian Federal Competition Authori -

• We want to stimulate innovation via an ac-tive competition policy.

• To do this, institutions that monitor competi-tion should be strengthened.

• Starting a business should be made mucheasier and relieved of cost burdens.

Objectives: Promote innova-tion through competition

Support measures

>> Remove administrative hurdles in the areas ofenterprise formation and service regulations

>> Reform of the Austrian Federal CompetitionAuthority (tasks, powers, resources)

>> Conduct sector-specific analyses (for exam-ple, in the fuel and food markets)

>> Assess competition policy regulations interms of innovation obstacles

ty should be strengthened and the organisationof competition authorities should be reformed toachieve optimal synergies of all institutions ac-tive in this area.

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5 Providing guidance, establishing frameworksEfficiently organising political governance

GOVERNANCE STRUCTURES


In the course of Austria’s successful catching-up process in research, technology and innova-tion, political governance has created importantstructures in the innovation system that havesupported the good overall performance. Withthe completion of the catching-up process andthe new goal of becoming an Innovation Leader,the demands on the national innovation systemare changing.

At the same time, economic and societal prob -lems are posing increasing challenges to re-search, technology and innovation. Solutionexpertise is needed, and this requires compre-hensive ideas that transcend the boundariesbetween fields of policy action, that applyacross institutions, and that include stakehold -ers from all segments of the innovation system,from scientists to innovators on the market. Thetask of policy management will therefore be-come more and more complex and will requirenew approaches.

The findings of the Austrian Research Dialogueand the CREST Report, the System Evaluationand recommendations from the Council forResearch and Technology Development on thefederal government’s RTI strategy, have locateda few weaknesses that the Austrian governancesystem has in the face of these challenges.

The System Evaluation identified their causesto be primarily in the “compartmentalised andfragmented policy structures”. These structuresstand in the way of a systemic overview, com-

The situation for political governance, however,is in the midst of a fundamental transformation.On one hand, the Austrian innovation system isfacing new challenges. The catching-up phaseis over. The Innovation Leader group is withinreach. Closing this gap is a core goal of thisstra tegy. On the other hand, today’s economicand societal challenges have global dimen-sions, suggesting a degree of complexity thatrequires comprehensive, systematic and in-creasingly international solutions.

Political governance of the innovation systemcannot be restricted purely to research, technol -ogy and innovation policy in its narrower sense.It can only be effective in mutual agreement andcooperation with other policy areas, such aseducational policy, competition policy and ageneral policy of international openness andmobility.

The most pressing topics in policy managementtherefore extend across various political areas.

These include:

>> efficiently arranging governance structuresand distributing competencies and tasks;

>> creating clear mechanisms for setting priori-ties;

>> transparently structuring the subsidy systemto reflect priorities;

>> acting coherently in a multi-layered politicalsystem, from internationalisation to regionalcoordination;

>> creating an adequate environment for dia-logue between science and business.

National innovation systems are complex networks of relationships between a large number ofactors that all have specific roles. The productive power of these innovation systems thus dependsto a significant degree on efficient governance, that provides guidance and establishes frameworks.It should open up opportunities that allow policy and administration, innovation actors and institutionsto move toward their objectives, thereby promoting the progress of the entire system.

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plicate the coordination of sector-specific policyapproaches, and frequently drive cooperation tothe informal and personal level.

The System Evaluation views the division oflabour between ministries and agencies aslegally clear, “however, the agencies, when itcomes to agenda setting and strategic develop-ment, have far more influence than is ascribedto them on the basis of theoretical require-ments. On the other hand, ministries are oftenalso active when it comes to implementing ini-tiatives.” Asymmetrical information distributionbetween ministries and agencies make effectivemanagement difficult, as does the double func-tion of ministries as owners and clients in pro-gramme development. To improve the assign-ment of roles, a shared process is recommendthat leads step-by-step to more strategicmanagement by the ministries on one hand andto more operational independence for agencieson the other.

Furthermore, the political governance mecha-nism was enriched by additional stakeholders –above all by functional integration in the form ofcouncils – and independent grant and financinginstitutions such as the National Foundation forResearch, Technology and Development or theClimate Change and Energy Fund (KLI.EN), al-though, according to the System Evaluation, toolittle attention was paid to the functions thatthese entities fulfil in the system.

• We want to coordinate the competencies of the responsible ministries in a clear way. To do this, efficient coordi-nation mechanisms should be established among the responsible ministries.

• Task distribution among the ministries and funding agencies should be optimised by granting higher operational inde-pendence to the agencies and simultaneously strengthening strategic management by the ministries.

• At the funding agency level, task administration should be tidied up to remove duplicate efforts.

• The system’s effectiveness and intelligence should be increased by augmented management of objectives and out-puts.

Objectives: Governance

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closely together with the ministries on re -commendations for the medium-to long-termorientation of this policy field. To do this, theCouncil for Research and Technology De -velopment will provide an annual workingagenda.

>> Strategically manage funding agencies viaperformance contracts based on output andimpact goals

>> Increase system efficiency for the ClimateChange and Energy Fund (KLI.EN) byenhanced exploitation of synergies, as wellas further development and coordination ofits instrument portfolio in the context ofmodern and flexible topic management

Support measures

>> Establish a Task Force for Research, Techno -logy and Innovation at a high level, with thefollowing responsibilities: Support, substan-tiate and coordinate the implementation ofthe new RTI strategy; the strategic andsystem-oriented articulation and coordina-tion of individual ministries’ activities; anddeal with the recommendations of theCouncil for Research and TechnologyDevelopment.

>> The Council for Research and TechnologyDevelopment is the federal government’sstrategic consultancy body for questionsrelated to RTI policy. The Council works

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porary timeframe, yet created for a sufficientand sustainable length of time. Moreover, theyshould be oriented equally towards scientificresults, marketable products and social solu-tions as outputs. Financial planning reliabilityand the formulation of specific targets areessential prerequisites.

Grand Challenges

The urgent need for finding a new approach toestablishing priorities becomes particularlyclear when we consider the Grand Challenges,the great societal challenges of the future. Theymust be addressed in a way that covers the en-tire system. This requires new forms of collabo-ration between ministries, agencies and stake-holders.

Climate change, dealing with scarce resources,and ensuring quality of life in the midst ofdemographic change are unquestionablyamong the global developments that often haveunforeseeable consequences and will require amajor collective effort to be solved.

Climate change is necessitating the develop-ment and application of completely new tech-nologies in energy use via factorial improve-ment of energy efficiency in construction, trans-portation (i.e., alternative propulsion systems,electro-mobility) and intelligent production. Atthe same time, adaptation strategies to climatechange must be developed to address irrevers-ible climate changes. On this issue, questionsrelated to environmental changes are just asmuch in focus as those related to health careand food safety. This is a matter of technologi-cal, systematic and social research supportedby analyses, impact studies, scenario andmodel building, space- and earth-based envi-ronmental monitoring, etc.

Global scarcities in energy, natural resourcesand strategic raw materials are increasingdemand for renewable resources. This poses

SETTING PRIORITIES


Around the world, setting priorities in policymanagement is receiving more attention andweight in research, technology and innovation.The scarcity of financial resources is one rea-son for this, as is the identification of majorsocietal challenges. The European Union hasaddressed the latter in the form of “GrandChallenges”. Top-down policy prioritisationmust, however, always be supported by evi-dence. We must find an adequate balance be-tween top-down and bottom-up approaches toresearch funding.

Austria was and is required to focus its activi-ties, especially when it comes to further de-vel opment of generic knowledge and generictechnologies, such as information and commu-nication technologies, material sciences, lifesciences, the humanities and social sciences.These are the drivers of new developments andenablers of economic and social progress.

Setting priorities in science and technology inAustria, however, is still not systematic enoughand often reactive in character, assuming theform of ad hoc interventions. In addition, currentpractices yield priorities that are in essencepurely ministry-specific priorities, which eachministry then uses to define its objectives. Thisleads to sub-critical measures and often to areduced impact on the research and innovationsystem. This applies in particular to the solu-tions that research and innovation contribute toupcoming social problems. Therefore, in future,priorities should be defined and implementedaccording to the dimension of the challenge, asinter-ministry or ministry-specific priorities.

Before the priorities can be defined, there needsto be a systematic analysis (using foresight,monitoring and roadmapping) and socialdiscourse. Priorities should be limited to a tem-

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Demographic change requires answers on howto guarantee a high quality of life that benefitsboth people and the environment. To do this,new and systematic research approaches mustbe developed that combine specific societalneeds with social and product-related innova-tions. This last point will become increasinglyimportant to support active lifestyles and self-sufficient modes of living.

Research, technology and innovation policy cancontribute to solving these challenges by creat -ing new knowledge, exploring innovative solu-tions, and providing more efficient and competi-tive technologies for society to use.

not only a technological challenge for society,but also the necessity of adapting space andland use appropriately. Ensuring sustainableproduction of biogenic raw materials and fuels(for example, bio-energy, solar thermal energy,photovoltaics and geothermal energy), as wellas their distribution via intelligent and secureinfrastructures, requires comprehensive, region -ally differentiated knowledge about ecological,environmental, economic and social conditionsthat must be gained through interdisciplinary,focussed basic research. Data, methods andmodels for continuous monitoring are indispens -able for making sure that the effects of chang -ing resource production and use can be con-stantly monitored.

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Support measures

>> Develop national strategies for generic sci-ence and technology fields

>> Establish “inter-ministrial research, technolo-gy and innovation priorities” and “ministryprio rities”, as well as a definition of themecha nisms and structures for their imple-mentation and realisation:> Inter-ministrial research, technology and

innovation priorities will be borne by sever -al ministries and can gain political legiti-macy if they are collectively presented bythe Council of Ministers

> Ministry priorities address the implemen-tation of goals and measures within oneministry’s own area of responsibility andcompetence

>> Assess the creation of inter-ministrial re-search, technology and innovation priorities,particularly for the Grand Challenges of “cli-mate change”, “resources” and “quality oflife and demographic change”

• We want to strengthen Austria’s competitiveness in a wide range of cross-cutting fields in science and technologyby focussing activities on units of internationally competitive size. To do this, fields in which domestic science andbusiness are strong should be taken into account. Special attention must be paid to the competences and poten-tials of Austrian firms that can help implement research results for overcoming the Grand Challenges.

• Priorities in research and technology development should be set on the basis of systematic selection and decision-making processes. While doing so we must make sure that governmental priorities are sufficiently justified to pre-vent market or system failure.

• The definition of new priorities for specific challenges should lead to a concerted coordination of activities in a com-prehensive system approach by all concerned ministries in the context of the Research, Technology and InnovationTask Force.

• To address the great societal challenges (Grand Challenges) of the future comprehensive system priorities mustbe established.

• Priorities should be defined on the basis of preliminary analyses, their effects should be limited in time, and theyshould be monitored.

Objectives: Setting priorities

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developing a situation conducive to researchand innovation, e.g. standardisation or regula-tions affecting taxation and the environment,would be another rich, efficient and cost-savingset of governance instruments. A strategyaimed to guarantee Austria a position as anInnovation Leader over the long term requires acomprehensive, and better coordinated, set ofimplementation instruments in funding policy.

The System Evaluation sees tax-related anddirect research funding as complementaryinstruments. Tax-related measures offer incen-tives for establishing and intensifying privateresearch investment. It also encourages multi-national corporations to locate their researchdepartments in Austria. The originally complex,unclear system of tax incentives for researchand development was simplified (research taxallowances were eliminated while simulta-neously raising tax credits from 8% to 10%).

THE FUNDING SYSTEM


The public sector has a wide range of options tocreate conditions and implement incentives thatcan promote research, technology and innova-tion in multiple segments of the innovationsystem. In Austria, this has led to a diversifiedfunding system that covers everything from indi-rect funding via tax deductions, open-topic bot-tom-up funding-upon-application, to top-downprogrammes for defined topics.

However, the funding system focuses primarilyon intervening through programmes. All avail-able data confirm an over-reliance on “pro-grammes”, a result of the tendency to solveprob lems, once they have been identified, by re-sorting to funding programmes because theyare the most readily available instruments. Yet

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• We want to establish an overall policy ap -proach in the funding system that appliesthe most efficient bundle of measures in acoordinated way in each context.

• Direct research funding should be furtherdeveloped as regards the use of an ade-quate mix of instruments.

• The regulatory basis for research fundingshould be streamlined.

• The principle of competition-based alloca-tion should be strengthened.

Objectives: The funding system

Support measures

>> Eliminate research tax allowances in accor-dance with § 4 Para. 4 of the AustrianIncome Tax Act; raise tax credits from 8% to10% in accordance with § 108c of the same

>> Optimise direct research funding:> Address funding goals with a coordinated

mix of measures and instruments, insteadof concentrating on programmes as pre-ferred instruments of intervention

> Establish strategic theme management inthe ministries (as opposed to programmemanagement), with a coherent and coordi-nated utilisation of all instruments

> Revise the variety of thematic programmesand concentration of resource utilisationto focus on a few, broadly defined prioritieswith strategic relevance for Aus tria

> Simplify, harmonise and standardise in-s tru ments to reduce administrative costsfor citizens and firms

> Change the regulatory principles of funding(guidelines, programme documents, etc.)while taking into consideration the specificneeds of target groups

>> Establish a modern, homogenous regulatoryframework for research funding as a basis forfederal funding

>> Increase the proportion of competition-basedfunding in basic research

>> Reinforce the performance orientation ofin sti tutional funding by setting up perfor-mance- and target-based contracts for basicfi nancing

However, decisions about location also includeother factors, such as the availability of highlyskilled human resources and the quality of theinfrastructure.

The role of direct funding, in contrast, is direct -ed towards supporting high-quality yet riskyprojects that, if successful, promise high andsustainable social benefits. Long-term fundingeffects, however, are realised primarily by firmsthat make use of both tax-related and directfunding instruments.

The new strategic goal of becoming an In -novation Leader and the economic and socialchallenges of the coming years speaks againsta nonselective continuation of the present, his -torically based distribution of funds, and re-quires to focus funding instruments more clear-ly. We will need a coordinated set of differentinstruments to be able to address the diversechallenges and target groups in a suitable man-ner.

In addition to the question of specific fundinginstruments, there is also the question of how toallocate funding within the system. In particular,institutional funding revolves around thequestion of allocation through allotment (basicfinancing) or through competition.

INTERNATIONAL POSITIONING


The political governance of research, technolo-gy and innovation takes place within the politicalsystem on several different levels. The emer-gence of the European Research Area createsa new playing field with growing influence. Oneessential task of policy management is Austria’sintegration into this political sphere, particularlyto ensure that we have a voice in setting policyand agendas.

Political management in Austria, however, oper -ates in a federal system in which the federalstates have in recent years become actors withtheir own research and innovation policies.

Austria and the EU ResearchFramework Programmes

Austria is very well integrated in the EuropeanResearch Area, which can be seen in the suc-cessful participation of Austrian researchers andresearch institutions in the European Union’s

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FP4 FP5 FP6 FP71

1994-1998 1998-2002 2002-2006 as at11/2010

Successful Austrian participations 1,923 1,987 1,972 1,558

Share of successful Austrian participations in overall number of participations 2.3% 2.4% 2.6% 2.4%

Retained projects with Austrian participation 1,444 1,384 1,324 1,141

Successful Austrian coordinators 270 267 213 189

Share of Austrian coordinators in total number of coordinators 1.7% 2.8% 3.3% 3.4%

Austrian share of granted funds (RI) 1.99% 2.38% 2.56% 2.57%

Approved grants for Austrian participations (in million euros) 194 292 425 4902

Indicator of financial return based on Austria’s contribution to the EU budget3 70% 104% 117% 126%

Source: PROVISO, the Austrian Monitoring Project of the EU Framework Programmes by bmwf, bmvit, bmwfj and bmlfuw

1 and 2 as at 11/2010 not all results are available; therefore the figures are indicative benchmarks

3 Source: European Commission – EU Budget 2009 Financial Report

Research Framework Programmes. The SystemEvaluation, however, identifies the need for addi-tional measures “to guarantee the transition froma mindset oriented towards programme returnsto one that exercises strategic co-determinationin relevant areas.”

This must be linked with appropriate organisa-tion and personnel development in the ministriesin order to build up competences and capacitiesfor active research and innovation policy partici-pation at the EU level. A coherent bundle ofmeasures is needed to optimally exploit thepotentials offered by the European ResearchArea and to promote Austrian interests with con-fidence.

Strategic collaboration with countries outside theEU – with innovation front runners such as theUSA, as well as the rising BRIC countries (Brazil,Russia, India and China), and the countries bor-dering Central, Eastern and SoutheasternEurope – still has significant expansion potentialand calls out for a coordinated approach. Thestrategic significance of Asia must also be takeninto account.

Path from the 4th to the 7th EU Research Framework Programme

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Support measures

>> Establish a permanent working group to co-ordinate and implement an Austrian policyfor international science and technology,consisting of the relevant ministries

>> Develop an action plan for “Austria and theEuropean Knowledge Area 2020”. It shouldbe developed by the Federal Ministry of

• We want to develop a fine-tuned international science and research foreign policy by bundling existing measuresto support internationalisation. To do this, we need to create the appropriate institutional structures.

• Austria should position itself optimally in the ‘European Knowledge Area’ by assuming a shaping role in the formu-lation of overall European policy on research, technology and innovation.

• In addition, we should strive for even more Austrian participation in European funding programmes, for example inthe Research Framework Programmes or the European Structural Funds, with the goal of further increasing thereturn ratio.

• Selective, global collaboration should be set up and expanded with innovation front runners such as the USA, select -ed Asian countries, and the rising BRIC countries.

• Collaboration with Central, Eastern and Southeastern European countries should be further enhanced.

Objectives: International positioning

Science and Research and the FederalMinistry of Transport, Innovation and Techno -logy, including relevant ministries and stake-holders

>> Develop a coherent cooperation strategy forvarious priority areas: Central, Eastern andSoutheastern Europe, North America, Asiaand the BRIC countries

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affects education policy and the design of curri-cula, as well as dealing with museums, mediapolicy, democratic policy and ethical questions.In Austria, this field has not been developedvery much yet. There has not been a managedcoordination and public funding of measuresand projects for conveying the results of sci-ence since the expiry in 2006 of the “InnovativeAustria” dialogue campaign, initiated by thefederal government and the Council forResearch and Technology. There are few pri-vate bodies for this task as other countries have,for example, in the form of foundations.

Thus the trust between citizens and science,which must be proven and legitimated againand again, remains fragile. Science lacks socialacceptance, and research policy decisions lackdemocratic feedback.

The importance of scientific integrity andresponsibility is not recognised enough by re-search policy. Low awareness of the problem indealing with conflicts of interest in research

RESEARCH AND SOCIETY


If knowledge today represents society’s mostimportant resource, then the production of know -ledge and its distribution becomes a crucialsocietal function. Science, as the institution ofknowledge production, therefore faces the chal-lenge of reporting on its activities to society.Dialogue is demanded, and participation, trans-parency and responsibility are expected. Therelationship between science and the public hasshifted fundamentally in recent decades andactively shaping this relationship has become atask for policy management. It revolves around“scientific citizens”, citizens who have the rightto be informed about science and technology,as well as make decisions about it. Yet thesecitizens are also committed to this interactionwith science and bear shared responsibility.

This is a complex and dynamic field of policythat penetrates several areas of society. It

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Support measures

>> Establish a central administrative location fordialogue between science/research andsociety

>> Promote dialogue activities for research,tech no logy and innovation

>> Conduct a regular national performance sur-vey to show how research makes a socialcontribution that shapes the future

>> Expand independent impact assessments oftechnology

>> Establish high standards for scientific inte g- rity:> Strict guidelines for dealing with conflicts

of interest in contract research> Disclosure of value systems in research> Make the results of publicly financed or

subsidised research projects available inan appropriate manner and method to thepublic

> Strengthen the organisations that areintended to do this

• We want a culture of appreciation for re-search, technology, innovation, and to pro-mote an understanding of how this fieldmakes an essential contribution to increas -ing the quality of life and societal prospe-rity.

• To do this, we must establish a stable infra-structural environment for multiple forms ofdialogue between science and society,along the lines of a “scientific citizenship”.

• Responsibility and integrity in scienceshould be strengthened via institutionalprocesses.

Objectives: Research and society

>> Create a clear statutory regulation of re-search ethics commissions related to auditcontracts, the legal quality of auditor’s opin -ions, and procedural rules

hurts not only the reputation of individual in-stitutions, but also that of Austria as a place todo research and business as well. Researchethics must become a priority in debates aboutintegrity.

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6 Providing incentives, creating optionsBroadening the financial base

ally approached the Lisbon target of one-to two-thirds.

This development was interrupted suddenly bythe outbreak of the 2008 financial and econom -ic crisis. Dynamism in research expenditure byfirms receded, and the public authorities reac-ted anti-cyclically by expanding their invest-ments. According to a global survey by theCentral Austrian Bureau of Statistics, Austria’sresearch intensity reached 2.76% in 2010,which puts us in third place in EU rankings. Theratio of public to private financing, however, hasagain deviated significantly from the targets.The state bore the costs of 41% of researchand development in 2010. This research anddevelopment momentum, driven by the public

Austria’s share of corporate sector researchand development expenditure, financed bypublic means such as direct subsidies and taxcredits, is significantly above the OECD countryaverage. The share of publicly funded researchin Austrian corporate research is 10.3%; theOECD average is 6.6%.

These public incentives have also induced over-proportional growth in private research invest-ment in the past decade. This placed Austria asthe European champion in investment dyna-mism for research and development, and keptits research intensity on the path towards thethree per cent goal of the Lisbon Process. Atthe same time, the ratio of public to privateresearch and development investments gradu-

The volume of public research funding in Austria today is well over 1% of the gross domestic product(GDP). This demonstrates the high priority that the policy agenda has placed on research, techno-logy and innovation in recent decades. The proportion of public research funding, measured interms of GDP, has climbed from 0.73% (1995) to 1.15% (2010). This number experienced signifi-cantly more dynamic growth than did the economy.

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sector, was the right thing to do during the catch -ing-up process of recent decades, and it alsohad its merits during the worst phase of thefinancial crisis.

If we are going to achieve our goal of reachingInnovation Leader status, however, then the in -novation system’s dynamism must be increasedfurther. This will require a significant increase inprivate investments in research and develop-ment, because all countries that have researchintensities of more than three per cent alsohave significantly higher financing from the pri-vate sector.

The Austrian federal government has declaredthat the objective is to reach a research intensi-ty of 4% by 2020, and views this target as partof a vision that provides orientation. In the faceof the financial crisis and the resulting necessi-ty for consolidating government finances, weare seeking to increase our research intensity

by one percentage point, from 2.76% today to3.76% in 2020. We have committed to this in theframework of the Europe 2020 EU strategy pro-cess. Attaining this goal, however, requires thatwe continue transforming the structure of thecorporate sector in the direction of research-intensive industries, while increasing the num-ber of firms that conduct systematic researchand development.

One of the great challenges of this strategy forthe coming years is therefore, in addition todirect and indirect funding, to stimulate firmsand research institutions by creating a situationthat encourages innovation and promote moreresearch. Private participation in the researchintensity of 2020 should at least reach 66%and, if possible, 70%. The contribution of thepublic sector should, after the necessary phaseof consolidation, be stabilised on a path whereit can support the research intensity with thisratio of private and public research financing.

International comparison of R&D expenditure

Support measures

>> Develop research funding regulations, e.g.:> Establish basic principles and targets of

research policy> Define output targets> Long-term budgetary planning reliability> Code of conduct

>> Open up alternative private financing sour-ces

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goals and evaluating them, and systematicmonitoring all contribute to efficiency gains.

These elements will be explicitly anchored inthe innovation system by research fundingregulations. These regulations will contain,along with principles and targets of the researchagenda, specific objectives, the definition of apath for federal research and developmentinvestments, a revision of research fundingregulations, planning and allocation policies, acode of conduct, and a reporting system.


The decision by firms to invest in innovationdepends significantly on the ability to supply thenecessary financing. Up to two-thirds of innova-tion projects in firms are financed from cashflow. The more innovative a firm is, the morelikely it is to use equity capital for financing, notleast to manage rapid growth.

The regulatory situation for equity capital fi-nancing of research and development invest-ments represents a bottleneck for tapping in-novation potential in Austria. Austria’s innova-tive firms lack a crucial source of financing (seethe section in Chapter 4 on enterprise formationand venture capital financing).

Security and trust in a stable financial environ-ment are essential for mobilising private re-search and development financing. The publicsector will therefore vigorously use existinginstruments to make planning secure. Federalfinances offer a four-year binding preview ofexpenditures for important policy areas. Withinthese limits, each minister can enter into multi-year contractual commitments. If this option isused, it would create years of planning securityfor policy, administration and all actors in theinnovation system.

Planning security, however, can also be ensuredby creating binding priority and resource plan-ning in all areas at the content level. In times ofbudget consolidation, streamlining the systemoffers the opportunity to free up funds for newpurposes. For example, this can be done by let-ting some programmes expire, combining pro-grammes, or by differentiating between re-search funding intensities.

The new budget law strengthens and promotesthe impact and output orientation of the innova-tion system with medium-term financing solu-tions and performance targets. Binding ex anteevaluations, standards for both formulating

• We want to increase research intensity byone percentage point, from 2.76% to3.76% of GDP, by 2020.

• Of this investment amount, at least 66%,but 70% if possible, should come from theprivate sector.

• Firms should be stimulated on a broadfront (including an improved regulatorysituation and sufficient incentive struc-tures) to perform more research and inno-vation. The number of firms conductingresearch and development should beincreased.

• Allocation of public funds should follow inline with the increased output and impactorientation of the innovation system.

• Innovation system actors should be guaran-teed the greatest possible planning security.

Objectives: Research funding

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Beyond designing political and regulatory frame-works for financing, however, we must orient theentire innovation system towards mobilising allpotentials that can be leveraged for research,technology and innovation in business and in -dus try. This is a primary goal of our strategy andrequires concerted efforts in all policy areas.Many of the necessary contributions to our stra-tegy have already been addressed in the chap-ters above: they extend from supplying highlyskilled workers to the rapid availability of newknowledge in exchange with scientific institu-tions; from attractive access to equity capital tocompetitive conditions that are both guaranteed

and fair; from monetary funding to efficient sup-port and consultancy services for positioning oninternational markets.

With our strategy for research, technology andinnovation, we want to take the path of a sys -tem ic, modern policy on research, technologyand innovation. A policy that connects with edu-cational policy and competition policy alike, takingadvantage of public procurement as an influen-tial instrument as well as reforms in the capitalmarkets. And our strategy should demand excel-lence in science as well as top performancesfrom firms working in technology development.

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IMPRINT:

Owners, Authors and Publishers:Federal ChancelleryFederal Ministry of FinanceFederal Ministry for Education, Arts and CultureFederal Ministry for Transport, Innovation and TechnologyFederal Ministry of Economy, Family and YouthFederal Ministry of Science and ResearchImages: Federal Ministry of Science and Research; Federal Ministry for Transport, Innovation and Technology; the Vienna University of Technology (p. 41); the children’s office of the University of Vienna (p. 15 and p. 47); fotolia.com; MEV-Verlag publishersLayout, graphic design, production coordination: Sigma Tau Stummvoll KG, 1090 ViennaTranslated by: Young Translations, 1030 Vienna

March 2011

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