1. technology and computing
2. technological innovation

Adopt, Adapt, Advance: Innovating
for the Future
ERBD wishes to acknowledge
Flagship Forum Partner
Major Forum Partners
Special Event Partner
Forum Partners
The Panel
1
2
1.Hakan Ayen
2.Beata Javorcik
3.Ralph de Haas
3
4
5
4.George Chirakadze
5.Albert Bravo-Biosca
TRANSITION
REPORT
2014
tr.ebrd.com
Adopt, Adapt, Advance: Innovating for
TEXT
TEXT
the Future
Produced by the Office of the Chief Economist, EBRD.
© European Bank for Reconstruction and Development
Background: Economic convergence is
slowing down
Real GDP growth in excess of Adv. Ec., per cent
12
Georgia relative to advanced
economies
10
8
Emerging markets relative to
advanced economies
6
4
2
0
CESEE region relative to advanced
economies
-2
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
-4
Sources: IMF WEO, EBRD REP, weighted averages.
5
Firms need to become more productive
•
Some firms are as productive as leaders in advanced markets…
•
…but laggards must adopt and adapt – or die – to raise aggregate
productivity and get countries unstuck
Share of firms
Transition region
Israel
Productivity
6
Adopt, Adapt, Advance: Picking the low-hanging fruit
Innovation is about improving productivity
within firms
Innovation goes well beyond R&D in high-tech
sectors
Products and production processes new to the
firm
Firms Adopt, Adapt and Advance towards
technological frontier
7
Growth 1993-2010
Who innovates the most?
8
Growth
1993-2010
% of firms that
innovate
Exporters
Source: : BEEPS V, MENA ES
9
Growth 1993-2010
Higher likelihood of innovation
(GVC vs. non-GVC firms)
Firms in global value chains
Source: : BEEPS V, MENA ES
10
Firms with access to credit
Percentage of firms that innovate
20%
15%
10%
5%
0%
Product innovation
No credit demand
Process innovation
Unfulfilled credit demand
Fulfilled credit demand
11
Growth 1993-2010
Who should innovate
more (or perhaps less)?
12
250
250
30
Percentage of firms that innovate
Percentage of firms that innovate
Percentage increase in labour productivity
Percentage increase in labour productivity
Pay-off from innovation highest in low-tech industries
25
200
200
20
150
150
15
100
100
10
50
50
5
0
0
0
Higher-tech sectors
Higher-tech sectors
Medium-low-tech sectors
Medium-low-tech sectors
Percentage of firms engaged in product innovation
Percentage of firms engaged in product innovation
Low-tech sectors
Low-tech sectors
Impact of product innovation on productivity
Impact of product innovation on productivity
13
Less advanced countries: Management matters most?
Growth
Increase in1993-2010
productivity, %
Increase in productivity, %
Management needs to be improved before new processes can yield substantial productivity gains
Source: BEEPS V, MENA ES
14
The Panel
1
2
1.Hakan Ayen
2.Beata Javorcik
3.Ralph de Haas
3
4
5
4.George Chirakadze
5.Albert Bravo-Biosca
Harnessing FDI
for Economic Growth
Beata Javorcik
University of Oxford
What are the essential ingredients for
fast and sustained economic growth?
Openness
Import
knowledge
Exploit global
demand
Leadership and
governance
Credible commitment
to growth
Credible commitment
to inclusion
Capable administration
Market
allocation
Prices guide
resources
Long-term
focus
High savings
Macroeconomic
stability
Modest inflation
Sustainable
public finances
Multinational firms (MNCs) are creators
of knowledge
MNCs are responsible for most of the world’s R&D
700 multinational corporations accounted for 46% of
the world’s total R&D expenditure and 69% of the
world’s business R&D in 2002 (UNCTAD 2005)
MNCs’ R&D budgets may exceed R&D
spending of countries (2002, $bn)
Knowledge brought by MNCs boosts
the performance of FDI recipients
Total factor productivity (in logs)
Pre-acquisition
Year
Acquisition
year
One year later
Two years later
FDI recipients
0.864
1.079
1.142
1.215
Control group
0.867
0.976
1.022
1.083
0.106***
(0.034)
0.122***
(0.045)
0.135***
(0.051)
Difference
Knowledge brought by MNCs boosts
the performance of FDI recipients
Total factor productivity (in logs)
Pre-acquisition
Year
Acquisition
year
One year later
Two years later
FDI recipients
0.864
1.079
1.142
1.215
Control group
0.867
0.976
1.022
1.083
0.106***
(0.034)
0.122***
(0.045)
0.135***
(0.051)
Difference
Knowledge brought by MNCs boosts
the performance of FDI recipients
Total factor productivity (in logs)
Pre-acquisition
Year
Acquisition
year
One year later
Two years later
FDI recipients
0.864
1.079
1.142
1.215
Control group
0.867
0.976
1.022
1.083
0.106***
(0.034)
0.122***
(0.045)
0.135***
(0.051)
Difference
Foreign ownership leads to rapid changes
(d) Employment
(c) Output
6.00
11.40
11.20
11.00
10.80
10.60
10.40
10.20
10.00
5.80
5.60
5.40
t-1
t0
t+1
t-1
t+2
(e) Average wage
9.00
8.80
8.60
8.40
8.20
8.00
7.80
7.60
t-1
t0
t+1
t+2
t0
t+1
t+2
Foreign ownership facilitates
integration into global markets
(h) Export share
(i) Import input share
45
35
40
30
35
30
25
25
20
20
15
15
t-1
t0
t+1
t+2
t-1
t0
t+1
t+2
Knowledge brought by MNCs spills
over to local suppliers
Local suppliers
Higher productivity
Moving up the value chain
Increased complexity of products
MNCs
Conclusion
By serving as a channel of
knowledge transfer, FDI inflows
can stimulate economic growth
and innovation in host countries
Thank you
The Panel
1
2
1.Hakan Ayen
2.Beata Javorcik
3.Ralph de Haas
3
4
5
4.George Chirakadze
5.Albert Bravo-Biosca
•The
new global laboratory for innovation
and growth policy
Albert Bravo-Biosca
EBRD Annual Meeting, 15th May 2015
Why do we need more
experimentation?
Policy
Business
Innovation and
entrepreneurship
policy…
… but little
evidence on
what works,
and what
doesn’t
Typically start big…
…without
prior smallscale testing
Why not trial different designs to learn what works?
What is an experiment? A continuum of definitions…
Trying something new
• No rigorous learning or evaluation strategy
• No real “testing mindset”
• A “pilot”
Trying something new
and put in place the
systems to learn
• Rigorous formal research design
• Test a hypothesis
• Codifying and sharing resulting knowledge
• Sometimes but not always with some
form of control group
RCTs
• Randomised controlled trials
• Control group created by the programme
manager/researcher using a lottery
• Field vs. “lab” experiments
• Different from a natural experiment
1. Experiment
Control group
2. Evaluate
3. Scale-up
IGL is a new global collaboration led by
Nesta that develops and tests different
approaches to support innovation,
entrepreneurship and growth
Our aims:
1. Improve the evidence base on the effectiveness of interventions
2. Encourage experimentation with new interventions
3. Push forward the knowledge frontier
Our partners
And on-going discussions with several other organisations
IGL Research Network
Some of our projects
Incentivising employees to contribute new ideas
Supporting technology development in emerging economies
Increasing bank lending for intangible-rich SMEs
•The
new global laboratory for innovation
and growth policy
www.innovationgrowthlab.org
The Panel
1
2
1.Hakan Ayen
2.Beata Javorcik
3.Ralph de Haas
3
4
5
4.George Chirakadze
5.Albert Bravo-Biosca
The floor is open for questions