Institute for Statistical Studies and Economics of Knowledge
UNDERVALUED INNOVATORS: EXPANSION OF THE HARMONIZED INNOVATION
SURVEYS TO MINING, UTILITIES AND AGRICULTURE
Prof. Leonid GokhbergVitaliy Roud
21 September 2016
Rationale to cover the sectors beyond the ‘core’ Sectoral specificities of innovation Adjusting the methodology: unification vs high
specialisation Cases: Mining and Quarrying Utilities Agriculture Conclusions
2© National Research University Higher School of Economics, 2015
Outline
3
• Pavitt’s taxonomy – deployed at sectoral level: Special role of advanced
manufacturing and science-based services as sources of technology for other sectors
Technological trends change existing views on the flows of knowledge in the national innovation systems
• Firm-level taxonomies: Presence of advanced (as
well as less sophisticated) innovation modes in all manufacturing and service sectors
• High-technology myopia (focus on high tech manufacturing)
• Cross-sectoral diffusion of radical platform technologies
• Low tech innovation, services
• Technological paradigms Narrow understanding of platform
(horizontal) technologies ICT-driven shift in productivity
• Next production revolution Interdisciplinary and cross-
sectoral convergence of technologies
1980-1990s 2000-2010sOriginal concepts behind the OM Recent evidence
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Scope of the harmonized innovation surveys
Conventional OM coverage:ManufacturingServices (often KIBS)
Typically left outside:Agriculture Mining and QuarryingUtilitiesConstructionTransport
General traditional argument to limit the sectoral scope (OM-2005): Low innovation activity beyond services and manufacturing
Rationale to increase sectoral coverage (1): Technological trends are transforming all existing and emerging sectors
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Worldwide concentration of innovation effort on technological prioritiesClimate change mitigation: lighting, electric power, transportationAgeing, health and food security: chemistry, biotechnology, etc.Information and communication management: “big data”, virtual payments, etc.New manufacturing processes: chemistry, nanotechnology, composite materials, new materials, additive technologies, lasers
Sustainable development heavily relies on advanced technologies• Existing technology at a certain point enables growth only at cost of
natural capital depletion. Restrictive green policies limit the growth• Sustainable development can only be enabled by disseminating new
technologies
ICT, robotics and automation, additive production, biotech&synthetic biology, nanotech including composites, smart materials, etc.
A shift in the production landscape and disruptive sectoral changes are led by convergence of advanced technologies
Technologies are a key factor determining productivity in all sectorsMechanics of multifactor productivity growth:(1) advances in global productivity frontier(2) diffusion of new technologies from the global frontier firms to national frontier firms(3) diffusion of existing technologies from the national frontier to laggard firms
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Rationale to increase sectoral coverage (2): economic significance
For certain economies these sectors account for: - a higher share of GDP and employment- considerable contribution to BERD and total R&D personnel
Source: OECD Statistics. 2014 or closest year
0 5 10 15 20 250
5
10
15
20
25
JapanSwitzerland
ChileNorway
Swizerland
ChileGreece
PolandPortugal
Series1 Series3 Series5 Series7 Series9
Share in GDP (%)
Shar
e in
Lab
or (
%)
0 10 20 30 40 50 60 70 80 90 1000102030405060708090
100
Australia
Australia
CanadaChile
Norway
Chile
Series1 Series3 Series5 Series7 Series9
Share in BERD (%)
Shar
e in
tot
al R
&D
per
sonn
el (
%)
7
Sectoral coverage: harmonized guidelines vs. national practices
Manufacturing
Services
Agriculture
Mining and Quarrying
Manufacturing
Utilities
Services
Construction
Sectoral coverage of national innovation surveys reviewed in the OECD Innovation Survey Metadata project (% of countries) 14
89
100
86
94
17
There exist broad national practices to measure innovation in non-’core’ sectors but lack of harmonization hampers data stocktaking
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Sectoral specificities of innovation activities……explained by business models, market structure and industrial organization
• heterogeneity of industry structures, dominant sizes of actors, regulatory frameworks, and presence of the state
• Products and processes and the underlying technology base (definitions of product and process innovation):
• e.g. agriculture: repetitive practices of interchanging crop types complies to a formal definition of innovation products
• Innovation activities and expenditure on innovation
• e.g. agriculture: shift to the advanced fertilizers; construction: new materials – little costs at the stage of initial introduction but high further current costs – total cost of ownership/total cost of innovation?
• Knowledge production/dissemination patterns
• institutional locus of formal R&D, impact of the appropriability conditions on the innovation-related rent, typical schemes of co-operation, etc.
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Adjusting the methodology: unification vs high specialisation
Methodological guidelinesUnified Sector-specific
Survey design
Unified survey, unified
questionnaire
Feasible for sectors that match the product/process definitions Most of EU countries, Canada: Mining, Utilities
Allows to control for certain specificities; produces comparable indicators Russia: Mining, Utilities; Construction
Unified survey, modular
questionnaire
Russia: small industrial enterprises
Broader account for specificities Russia: Agriculture
Specialized survey Ad hoc studies
Production of detailed and specialized policy-oriented indicators Australia: Agriculture
anticlinal theory rotary drilling seismo-graph well logging
offshore drilling digital computing directional drilling three-dimen-sional seismic
three-dimen-sional simulationlong horizontal drilling and multi-stage hydraulic fracturingnext gene-ration three-dimensional, four-dimensional (time lapse) and micro-seismic
Source: Sandrea I., Sandrea R. (2007) Global offshore oil: geological setting of producing provinces, E&P trends, URR, and medium term supply outlook.
In mining, new technology means access to new resources
Offshore exploration wells drilled and new oil discoveries
Offshore yearly oil discoveries and average field size
Technological innovationsin the upstream oil industry ...
... and their impact on oil discoveries (case: offshore oil)
18931900s
19141924
1930s1960s
1970s1980s
1990s2000s
2010s
Source: Jackson PM, Smith LK. (2013) Exploring the undulating plateau: the future of global oil supply. Philos Trans A Math Phys Eng Sci.
Case Study: Mining and Quarrying
ВЛИЯНИЕ ТЕХНОЛОГИЙ НА ЭКОНОМИКУ ПРИОБРЕТАЕТ ЭФФЕКТ «СНЕЖНОГО КОМА»: ЭНЕРГЕТИКА
7Technological and non-technological innovations are game-changers in the Utilities sector
Case Study: Utilities
Share of photovoltaics in global electricity production
Gross electricity generation (GW)
Inst
alle
d co
st p
er k
Wh
(USD
)
Single point of contact
Price parityElectricity retail price based on natural gas
Electricity wholesale price based on coal
Textured monocrystal
Iso-textural multicrystal
Monocrystal, sputtering contacts in vacuum
Renewable energy resources
x5increase in annual investment since 2004
of new generation capacities
share by 2030 (inclusive of hydroenergetics)
ENERGY STORAGE SYSTEMS
SMART GRIDS
Min price for 1 kWh with the use of solar energy in the first six month of 2016 twice less than min price in 2015 (UAE, Mexico etc.)
Accumulator batteries cost reduction to $200/kW by 2030
Smart grid global market worth over $400 bln by 2020 (CAGR=8%)
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• Survey design: unified• Methodological guidelines: sectoral examples of innovation• Findings:
Mining and Utilites – measurement in Russia since 1995
In terms of intensity:• Share of innovation companies in Mining and
Utilities similar to Low Tech• Innovation expenditure is higher• Innovation output in Mining outperforms Low Tech
1 2 3 4 5 6
17.46.3
20.8 2139.8
9.3
110.1
8.8 8.2
8.9
3.2
64.6 70.6 48.637.2
34.1
67.4
9.8 39.7 10.9
6 9.1
Innovation expenditure by type of activity (%)
Series1 Series2 Series3 Series4 Series5 Series6 Series7 Series8Series9
1 2 3 4 5 6
6.5 6.510.9
17.4
30.6
4.57.2
4.18.8
14.817.7
0.71.4 0.7 2.6 2.46.1
1.8
Innovation activity (%)
Series1 Series2 Series3
In terms of strategies:• Mining ~ Medium High Tech• Utilities ~ Low Tech
1 2 3 4 5 6
25.7
58.4 55.874.8 77.9
24.4
81
54.8 6346.4 52.2
82.6
35.4 26.3 31.1 29.7 29.4 33.3
Share of innovation companies that perform:
Series1Series2Series3
Strong propensity to process innovation
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Rise of the new technological revolution in agriculture
Accelerated selection, seed growing and breeding technologies
Technologies for production of vaccines, antibiotics, antivirus preparations for animal farming
Technologies for veterinary and phytosanitary control
Basic precision agriculture technologies (geolocation and satellite navigation)
Technologies for producing new types of fertilizers
Technologies for genetically engineered modification
Technologies for making basic agricultural machinery
Case Study: Agriculture
Technologies for deep processing of agricultural materials
Basic food biotechnologies
Technologies for complete on-the-spot utilization and recycling of agricultural industry’s waste
Urban agriculture technologies
Complex precision agriculture technologies (based on big data, machine learning, artificial intelligence, including swarm intelligence)
Convergent smart bioenergy technologies
Technologies for system integration of agricultural sector’s logistics, based on supercomputing
Technologies for production of personalized, functional and synthetic foods
Hydroponic and aeroponic technologies
30% reduction of agricultural production cycle time, 90% reduction of water intensity
Robotic greenhouses
40–50% reduction of fruit and vegetables retail price in the Russia’s Far North
Global pesticides market, bln. USD
Radical shifts in products, processes, organizational and marketing methods in agriculture
Product:
biopesticides
synthetic pesticides
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Case study: Agriculture
Russia (2017)Australia (ABARES-2010)Survey design: unified, modularMethodological guidelines: sector-specific
Focus on detailed specification of the compatible definitions:• product, process and non-
technological innovation (clarifications and examples)
• innovation expenditure (instructions and examples)
• sales of innovation products (definitions for new crops/breeds)
• factors hampering innovation (+ climate/nature/environment risks)
• Innovation objectives (+ reduction of weather-related uncertainty,+ reduction of biological risks+ soil enrichment/recultivation)
Survey design: specialized Methodological guidelines: sector-specificFocus on detailed process and organizational innovation:
Product innovation
New crop typesNew crop cultivarsNew livestock typesNew livestock breeds
Process innovation
Cropping equipmentFertiliser practiceWeed, pest and disease management practicesSoil management practiceWeed-related natural resource managementPest-related natural resource managementSoil-related natural resource managementOther crop practicesLivestock feeding practiceLivestock handling practiceLivestock health practiceGrazing management practiceOther livestock practices Pasture type Irrigation and water management practices
Organisational
innovations
New approach to labour useNew members to farm management
Marketing innovation New approach to marketing farm’s production
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• Rationale to include non-’core’ sectors into innovation surveys
• An obvious need for internationally harmonized methodologies
• Umbrella-style general definitions accompanied by sector-specific additional details
• Modular design of international innovation surveys
• To begin with: a stocktaking OECD/Eurostat exercise
Conclusions