Thursday, November 23, 2006

Economic transformation the tech-o-no-logical way

As proposed by Jez Weston in this week's RSNZ Alert No. 450
1. IS OUR INNOVATION SYSTEM GOING TO DELIVER ECONOMIC TRANSFORMATION?
Comment by Royal Society Policy Analyst, Dr Jez Weston
We have been hearing about economic transformation for about five years
now, at least since the first Knowledge Wave conference in 2001. But what
does economic transformation mean and how would we know if we had one? The
Ministry of Economic Development (MED) and Cabinet have released some work
about just that. The cabinet papers say all the right things about creating
"a high value, innovative and creative economy"; through higher
productivity, a more skilled workforce, smarter resource use, stronger
international connections, a vibrant primary sector and a diversified economy.

Given that our innovation system is supposed to be the engine of this new
car, is it going to be able to provide enough push? Many of the recent
changes to the system have been to improve the efficiency of our RS&T
setup. However, a more effective innovation system, in the first instance,
means simply a larger system. The big gap is in the private sector,
especially as private R&D produces more patents than public R&D, per
dollar. So it\'s pleasing to see our private R&D spending growing faster
than the OECD average rate (6.0% against 3.7%). The business tax review is
looking closely at R&D support and this would be most welcome. MED research
suggests that, dollar for dollar, tax incentives are more effective at
promoting private R&D than grant-based schemes such as the current
Technology for Business Growth and Grants for Private Sector R&D. Given
finite resources, tax reforms might offer greater bang for the buck.

So it seems as if we are heading towards the best policy for addressing the
major problem with our innovation system. However, business R&D might be
growing fast but it\'s starting from a tiny base, with investment less than
a third of the OECD average. Further MED research suggests that our RS&T
system is just the size you would expect, given our disadvantages of
distance from markets, firm size and industrial structure. So how much of a
push are we going to get? Given that we\'re only shelling out for a Civic,
we can\'t expect it to perform like a Porsche.


2. SEMINAR, 1 DECEMBER, ON PRICING GREENHOUSE GAS EMISSIONS, WELLINGTON
Victoria University’s Institute of Policy Studies in the School of
Government and the School of Earth Sciences will be running a discussion
"So you want a Price on Carbon?" with Assoc Professor Ralph Chapman, Simon
Terry and Murray Ward to be Chaired by Professor Jonathan Boston on Friday
1 December in Room 312, Level 3 Railway Building, Bunny Street, Victoria
University from 12.30 p.m. – 1.45 p.m.
The consensus increasingly favours significant action to reduce greenhouse
gas emissions. The question is how and when - in particular, how and when
setup. However, a more effective innovation system, in the first instance,
means simply a larger system. The big gap is in the private sector,
especially as private R&D produces more patents than public R&D, per
dollar. So it's pleasing to see our private R&D spending growing faster
than the OECD average rate (6.0% against 3.7%). The business tax review is
looking closely at R&D support and this would be most welcome. MED research
suggests that, dollar for dollar, tax incentives are more effective at
promoting private R&D than grant-based schemes such as the current
Technology for Business Growth and Grants for Private Sector R&D. Given
finite resources, tax reforms might offer greater bang for the buck.

So it seems as if we are heading towards the best policy for addressing the
major problem with our innovation system. However, business R&D might be
growing fast but it's starting from a tiny base, with investment less than
a third of the OECD average. Further MED research suggests that our RS&T
system is just the size you would expect, given our disadvantages of
distance from markets, firm size and industrial structure. So how much of a
push are we going to get? Given that we're only shelling out for a Civic,
we can't expect it to perform like a Porsche.
ummm, from the number of negative items i throw out on this blog based on RS Alerts you'd think i tend to disagree with Jez a lot but on this, i don't think anyone could argue that NZ has exactly the research infrastructure it paid for.

But to belabour the point - we've heard all the talk ad nauseum for a decade. I'm inclined to think if I started working in the mid-80's rather than the mid-90's, i'd be able to say that we've been hearing this for 2 decades...
Here some measurable goals:
  1. The NZ Centre for Biotechnology - a $100 million dollar institute devoted to creating a centre of excellence in applied biotechnology to our pastoral industry. It's either in Auckland or Hamilton since if you want to attract int'l talent, you should be pitching the closest thing NZ has to a global/regional city
  2. Give it a decent wad of funding each year to distribute as it sees fit - scientists are the best judge of science not Wellington beuracrats. Back up the funding with some clear deliverables and fire the CEO if they're not met.
  3. Increase public sector funding to 2x the OECD average and legislate for a 25 year timeframe.
  4. Allow public sector funding applications to include capex and opex for both salaries and equipment. Not funding for salaries is a sop to university/CRI research and hinders one of the most important parts of the tech development cycle - the entrepenuer angle (Q is this still true? what % of contestable funding allows complete independence of a govt organisation?)
  5. Public sector R&D gets a 125% tax write-off. Go on, make it attractive to develop your IP
You get what you pay for...

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