The emerging role of Publicprivate partnerships in Spanish S

1
The emerging role of Public-private partnerships
in Spanish ST and innovation policies

• Luis Sanz-Menéndez
• Ministry of Education and Science
• CSIC Institute for Public Goods and Policies

OECD Working Party of Senior Budget
Officials Symposium on Evaluating Innovative
Approaches to Public Service Delivery Madrid,
30-31 October 2007
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Outline of the presentation

• PPPs in the context of Research and Innovation
  Policies
• Features of the research and innovation system
• Former PPPs initiatives prior 2004
• OECD Review of the PPPs in Spain (2004)
• Background and rationales for new PPPs
• Responses to the OECD Review CENIT

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The context of research and innovation policies
confronting PPPs

• Evolution and changing targets of science,
  technology and innovation policies
• Research direct performance
• Mission oriented and applied technologies
• Indirect measures (incentivating private
  investments)
• Production, diffusion and utilization of
  knowledge as central factors for economic growth,
  social welfare and sustainability

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Profiling the Spanish Innovation System
Performance range of OECD countries
Performance range of G7 countries
Spain
500
Macro-economic
RD
Human
Scientific
Innovative
Science-industry
International
Technological
performance
activities
resources in
output
output
linkages
linkages
entrepreneurship
450
ST
industrial
structure
400
350
300
250
200
150
100
50
0
GDP per capita
Annual MFP growth
Annual growth of GDP
Density of innovative firms
Intensity of RD expenditures
Business funding of public RD
Firm co-operation with universities
Firm co-operation with government
Population of business researchers
Intensity of public RD expenditures
Graduation rate at PhD level in SE
Share of SE articles in life sciences
Share of technology intensive exports
Scientific and engineering publications
Intensity of business RD expenditures
Concentration of "triadic"patent families
Contribution of foreign affiliates to RD
Intensity of venture capital investments
Breadth of international coauthorship ties
Share of patents with foreign co-inventors
Share of SE articles in physical sciences
Business funding of higher education RD
Population of professionals and technicians
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Situation and evolution of RD and innovation in
Spain

• RD effort still low but growing fast, GERD/GDP
  1.10 (2003) 0.82 (1997)
• Industry financed RD also growing 48,4 (2003)
  44,7 (1997), but still far from the EU average
• Significant contribution of business to the
  funding of HERD and GOVERD

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Share of HERD and GOVERD financed by industry
12.5
10.0
7.5
EU-15
Spain
5.0
Total OECD
2.5
0.0

1981
1984
1987
1990
1993
1996
1999

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Situation and evolution of RD and innovation in
Spain

• Innovative firms 20,6 (2002), but improving
• Innovative firms in Spain cooperate in innovation
  less than in other European countries
• Size of companies is positively correlated with
  innovation cooperation
• Suppliers are the main source of innovation
  information for SME, while Universities play a
  significant role for larger companies

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Innovative firms cooperating in innovation (),
2000
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Challenges and opportunities of the Spanish
innovation system

• Industrial structure is dominated by services,
  low and medium technology industries and SMEs
• PROs (specially universities) are the biggest
  knowledge producers and a reservoir of ST
  capabilities (70 of all researchers)

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Other features of the RD and innovation policy
environment

• Institutional fragmentation of ST policy
  domains Various Ministries of the central
  government involved
• Regional governments (17) also play a very active
  role in ST and innovation policies
• ST and innovation action is developed under then
  umbrella of the National RD and Innovation Plan,
  resembling EU RTD FP

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Policy targets and implementation

• Therefore promoting technology transfer from
  PROs to industry and fostering sustained
  cooperation between industry and science has
  been part of the underlining rationales and
  explicit objectives of ST and innovation
  policies
• but historically too much fragmentation in the
  programs and policy initiatives, because of the
  dominant bottom-up policy model

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Types and cases of PPPs for RD and innovation

• Public funding for RTDI in a context of
  increasing relevance of PP collaboration
• Constructing and supporting a common pool of
  resources for technological services and
  innovation and under PPP
• Competence RTD centers in specific technology
  areas
• Steering Public research activities under PPPs
• Clustering and Agglomeration strategies under
  PPPs
• Changing the RD regulatory environment to
  encourage PPPs and blurring boundaries between
  public and private
• New commercialization, start ups and spin off
  strategies of PROs
• PPPs for strategic private funding of RTD of
  general interest areas

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General features of the PPPs for research and
innovation before 2004

• Small size of the projects supported
• Limited timeframe of the cooperation
• Multiple instruments and Fragmentation
• Stretching of traditional instruments of public
  policy
• Bottom up initiatives from the societal actors

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As a way of balance before 2004

• Many initiatives and experiments, but not
  canonical PPPs programs
• Some of the most interesting cases are bottom-up
  initiatives, but have been taken on board by
  governments

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Problems and opportunities in 2004 (I)

• A new, or an evolved, policy rationale is driving
  the innovation system into more PPPs (new
  conditions for a more intelligent public funding)
• New initiatives from below (firms and PROs) and
  experiments that implies a societal demand of
  PPPs approaches are emerging
• Political opportunity 25 of RD budget increase
  expected next 4 years.

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Problems and opportunities in 2004 (II)

• A more pro-business view of ST and innovation
  policies favours the development of PPP,
• but the institutional architecture of STI
  policies (Ministries of Education Science
  versus Industry Technology) often creates
  important constraints because of the
  customer-client view of the Ministries in the
  context of distributive politics

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Problems and opportunities in 2004 (III)

• International diffusion of PPPs for innovation
  policy is a relevant factor
• Need of policy entrepreneurs and strategic
  research actors (with negotiating skills) to
  overcome the pervasive battles over distributive
  politics within inappropriate institutional
  environments and to built an advocacy coalition
  for PPPs
• OECD could play a role in shaping the outcome

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The impact of the OECD evaluation

• End 2003 the Spanish authorities requested the
  cooperation from OECD to evaluate the current
  practices of PPP for Research and Innovation
  (CSTP-TIP)
• The Review was developed in 2004 and published
  early 2005.
• Mid 2005 The Spanish Government launched (in
  the context of National Reforms Program) INGENIO
  2010, including the CENIT Programme (Strategic
  Consortia for Technological Innovation)

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Results of the OECD PPP review
OCDE(2005) the Spanish system of research and
innovation has now reached a sufficient level of
sophistication for a new approach to the
promotion of science-industry relationships to be
successfully experimented adapting the model
implemented in diverse OECD countries to the
Spanish conditions.
Other countries experiences
CENIT (Consorcios Estratégicos Nacionales de
Investigación Tecnológica)
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CENIT Background and Rationale (1)

• Strong role of universities and PRO in the
  Spanish Research and Innovation system
• Industrial structure
• large share of low-medium tech industries,
• large share of SMEs,
• large share of MNCs,
• Large share of service economy

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CENIT Background and Rationale (2)

• Fostering sustained cooperation between industry
  and science, that is
• ... over a longer period (min. 5 years)
• ... on an institutional basis (but flexible)
• ... with an ambitious research programme
  (significant budget)

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Goals of PPPs for Research and Innovation

• Encouraging existing firms to engage in more
  radical types of innovation
• Promoting technology-based start-ups
• Increasing the role of the Public Research sector
  in providing a research base to be utilized
  co-operatively with industry
• ...but multi-purpose programmes with many goals
  - problem of target setting!

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Description of the Programme CENIT

• since 2005
• fostering long-term collaboration between
  enterprises and public research institutions
• Despite some technology areas mentioned, no
  ex-ante setting of thematic priorities
• Competitive selection process (public calls)
• First call subsidies for 200 M (16 projects)
• Second call Subsidies for

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CENIT PP collaboration programme versus previous
instruments

• TRADITIONAL INSTRUMENTS
• One shot projects
• Small duration (1-3 years) and limited scope
• Support mainly based on soft loans

• CÉNIT
• Thematic lines of research
• Long duration and bigger size
• Bigger role of public subsidies

• Research with more commercial risk
• Bigger leverage of private funding and
  behavioral additionality

• Low commercial risk RTD
• Limited behavioral additionality and leverage of
  private investments

CENIT Projects 10-20 Million euros per project
National RDI Plan 2001-2003 60K subsidy
116K repayable loans per projects
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CÉNIT Programme General features

• Long Term Research Contractual Agreements between
  firms and research groups in PROs for a joint
  research programme
• Minimum size 4 firms (2 SME) and 2 PROs
• Minimum duration 4 years extendible
• Minimum budget of the project 5 M euros per year
• Financial rules
• i) Minimum contribution of private sector 50
• ii) Minimum participation of PROs and TICs 25

• Expected Budget of the CENIT programme 1,000 M
  euros in 4 years (half private).

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Elements of good practice (1)

• Implementing a sound concept of PPPs based on
  international experience
• Targeting systemic failures instead of specific
  sectors
• Applying a flexible, bottom-up approach
• Clear governance structure (caveats!)
• Ensure quality through selection criteria and
  processes

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Elements of good practice (2)

• Long-term commitment and additionallity (trust,
  behavioral additionality)
• Clear delineations to other sources of public
  support
• Catalyst of change for setting new standards in
  evaluation and policy learning
• Diversified portfolio and broad participation
• Linkages and visibility

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Challenges of PPPs instruments for RTD and
innovation ins Spain

• Synergies and overlaps with other instruments?
• How many new projects?
• Future after the funding?
• Governing structures of the projects
• Sustainability and transformation into joint
  research centers
• Difficulties of measuring efficiency and
  additionality. Evaluation

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Thanks

• LSanz_at_iesam.csic.es
• Or
• Luis.Sanz_at_mec.es