How Can We Explain the American Dominance in Biomedical Research and Development?

Measuring the Austrian Innovation landscape - Fact sheet on the Austrian S&T Report 2006

bridges vol. 13, April 2007 / Feature Article

by Barbara Schultze

The Austrian Research and Technology Report 2006 aims to provide an overview of Austria's research and funding activities, their development over the last years, and their international context. As provided in § 8 of the Austrian Research Organization Act, the federal government has to submit a status report on federally funded research, technology, and innovation to Parliament by June 1 every year. Every three years, a comprehensive overview on the "state and requirements of RTI in Austria" has to be given; the 2006 report published last April constitutes such a detailed report. It by no means merely consists of a collection of facts and figures, but also contains a detailed analysis of a wide range of issues relevant to the Austrian innovation landscape during the last several years. Topics covered include trends in the Austrian innovation system, recent developments at Austrian universities, innovation in the corporate sector, and the internationalization of the Austrian innovation system.

The report was commissioned by the (former) Federal Ministry of Education, Science and Culture, the Federal Ministry of Transport, Innovation and Technology, and the Federal Ministry of Economics and Labor, and was prepared by tip (Technologie Information Politikberatung) with support of Statistik Austria under coordination of an inter-ministry working group.


Key facts and figures - significant increase in R&D spending


For the year 2006, Statistik Austria estimated that Austria would spend a total of €6.24 billion on R&D, an increase of 7.9 percent over 2005. The R&D rate was estimated to increase from 2.35 percent of Austria's GDP in 2005 to 2.43 percent in 2006, gradually nearing the Barcelona target of raising the R&D figure to 3 percent of the GDP by 2010. In order to meet the Barcelona target, the report states that it would be necessary to increase spending by almost 10 percent per year between 2007 and 2010.

Since 1995, overall spending on R&D has risen by 131 percent, or 7.9 percent on average per year. Broken down by sectors, theoverviewrdexpenses.gifoverviewrdexpenses.gif public sector on both the federal and regional level has increased its investments by 80.7 percent, or an average of 5.5 percent per annum since 1995, and was estimated to account for 36.1 percent of the total R&D spending in 2006. In total, the public sector was projected to spend some €2.25 billion in R&D, an increase of 9.5 percent compared to 2005. Much of the increased public spending on R&D in recent years has been achieved by three "special funds" ("Offensivprogramme") distributed outside the ministries' regular budgets, with a volume of €508.7 million (2001-2003), €600 million (2004-2006), and €1 billion (2007-2010), the so-called "Research billion."

As the largest and most dynamic sector, the corporate sector expanded its R&D investments by 132 percent, or 7.9 percent per annum on average since 1995. For 2006, total investments of the corporate sector were estimated at €2.86 billion, an increase of 8.1 percent over 2005. The corporate sector was projected to have a 45.8 percent share of the total R&D spending in 2006.

R&D spending has increased in all economic sectors: Between 1998 and 2002, the services and manufacturing sectors have grown by 71 percent and 37 percent respectively. The 24 percent growth of R&D expenditure in the high-tech sector was less than in the sectors with a lower technology level (compare to 53 percent at the medium high-tech and 40 percent in the medium low-tech sectors).

Institutional changes in RTI policy and tools for RTI promotion


In order to make the Austrian innovation system more competitive and dynamic, far-reaching institutional changes have been introduced since 2000 in the RTI policy system:

- The Council for Research and Technology Development (RFTE) was set up in 2000 as an advisor to the federal government on all issues of research, technology, and innovation.

- In 2002 the Austria Wirtschaftsservice (AWS; Austrian Economic Service) was established - a federal bank with the task of financing and handling economic promotion schemes especially for SMEs and on a regional level.

- The Austrian Research Promotion Agency (FFG) was formed in 2004 to combine research and advisory services for application-oriented research and technology promotion schemes on the national and international levels.

- The Science Fund (FWF) underwent a substantial internal reorganization in 2004 to prepare it for its agency function.

- Also in 2004 the National Foundation for Research, Technology and Development was created, with a fund to achieve longer-term financial security in the realm of public RTI promotion schemes.

Regarding tools for RTI promotion, the report states that the variety of schemes available has continued to expand during recent years. A strong emphasis has been placed on bottom-up schemes with a broad scope of action, and on generous indirect schemes in the form of tax breaks for R&D. These measures have led to an increase in the number of enterprises pursuing R&D. Both direct and indirect schemes are devised to allow easy access to state aid, regardless of the technological focus and sectoral association of the applicant. In recent years technology and structural programs have enhanced network structures and the "culture of cooperation" between the science and business communities.

The European Innovation Scoreboard

The report presents the findings of the then current European Innovation Scoreboard 2005 (EIS), which gives an overview of the EU's innovation performance. Whereas Austria was still ranked among countries with a below average level and weak dynamism in 2003, it has substantially improved its performance and is now among the countries with the fastest growing Summary Innovation Index (SII). When looking at specific indicators, Austria was ranked among the top three in business R&D expenses and employment in high-tech sectors, the proportion of innovating SMEs, and the proportion of enterprises receiving public funding for innovation, among others. With regard to "innovation drivers," Austria was in a middle position.

In February 2007 the EIS 2006 was published, ranking Austria in the 8th position as compared to the 5th rank in the EIS 2005. How should this relapse be interpreted? Günther Bonn, deputy chairman of the Council for Research and Technology Development comments as follows: "The quad of countries in positions 5 through 8 only differs within a small range." He also states one statistical reason: "We have a high proportion of companies investing in Austria where the parent company is located abroad. One question is which country is credited with the company's investment." Whereas some European countries attribute such investments to the receiving country, Austria apportions them to the location of the parent company. This general assessment is shared by Wolfgang Polt, Head of the Vienna Office of the Institute of Technology and Regional Policy of Joanneum Research: "Austria is in a group of countries that are performing well in terms of innovation and R&D intensity, and they are ranked very close together." In general, he recommends that "policy should not be indicator-driven but substance-driven" and should focus on existing structural weaknesses: "The main fields where Austria has shown weak performance in the EIS indicators have remained the same over the years: lack of venture capital, too few S&E graduates, and a comparatively lower share of the population with a tertiary education and degree - although the latter is partly due to differences in statistical definitions."

Participation in the 6th Framework Program

Austria was able to increase its participation in the EU's 6th Framework Program by 6 percent as compared to the 5th Framework Program. This is particularly remarkable considering that the relative share of the EU-15 has declined since newer EU member states improved their participation with growth rates from 30 percent (Czech Republic) up to 130 percent (Lithuania and Malta). By March 2006, Austrian researchers had received 2.5 percent or €304 million of the total subsidies. In cumulative amounts, Austria has so far received 114 percent of its fictitious financing contribution - thus, the Austrian return exceeds the country's contribution to the EU budget.

Recent developments at Austrian universities

With the University Reform 2002 and the University Act 2002, Austrian universities have been given a full legal personality and extensive autonomy. In this context, the public sector and universities have to enter into three-year performance agreements: For the period 2007-2009, the "agreement to strengthen universities aiming to add a new focus in science" will lead to a substantial budget increase for Austrian public universities of 13.5 percent, to about €2.1 million between 2006 and 2009. Universities also have drawn up development plans describing their particular strategic focus. As a general trend, the Report observed that public universities intend to strengthen research and clarify their profile, many formulating focal points for research.

Austrian universities were able to augment their R&D spending by 21 percent to €1.17 billion between 1998 and 2001. Even though the corporate sector tripled their spending to nearly €50 million or a 4.2 percent share in 2002, the public sector finances 91 percent of total university R&D costs. Returns from the EU research framework programs doubled between 1998 and 2002 to €36 million in 2002. These developments indicate an increasing openness of universities and more cooperation between universities and businesses.

In 2002, about half of all university R&D investments were attributed to basic research, with 40 percent and 11 percent spent on applied and experimental development type research respectively, a slightly higher rate than in 1998.

Innovation in the corporate sector

With a share of 25 percent of the overall corporate spending on R&D (2002), the services sector is gaining importance within the Austrian R&D landscape and is increasingly seen as a source of innovation, and not merely a passive recipient and adopter. About 80 percent of the R&D spending of the services sector is concentrated in the segments real estate and company services, research and development, and computer-focused services. Software companies, for example, quadrupled their R&D investments from 1998 to 2002.

Globally, information and communication technologies (ICT) are one of the main drivers of technological progress. In Austria, the ICT sector is responsible for 29.3 percent or €914.3 million (2002) of the total R&D spending by the private corporate sector, putting Austria in a middle position among OECD countries. In diffusion-oriented indicators (e.g., PC and Internet coverage), Austria ranks in a middle position as calculated by the OECD for 2003.

From an international point of view, patent applications to the EPO more than doubled from 1992 to 2004, with the biggest growth rates since the 1990s. Austrian applications to the EPO reflected this trend to a lesser degree. Austria's share in patenting activities at the EPO experienced a slight decline from about 1 percent in the 1990s to approximately 0.8 percent in 2004.

Internationalization of the Austrian innovation system

Since the 1990s, and especially since the accession to the EU, Austria has experienced a remarkable "passive internationalization" of its innovation system: For 2006, it was estimated that more than €1 billion would be invested by foreign companies for R&D in Austria. In 2002, 29 percent of the entire R&D activities of the corporate sector, more than half of the activities in the cooperative sector, and 4 percent of universities' research activities were financed from abroad.

At the same time, Austrian companies have also intensified their international innovative activities. Being present in foreign markets, getting closer to their customers, and cooperating with foreign universities and companies, but also problems in finding suitable research staff in Austria were cited as the key motivating factors for international R&D activities of Austrian companies.

Researcher's mobility

The mobility of researchers is widely regarded as an indicator for the competitiveness of a national research environment. Research positions abroad are a crucial vehicle for knowledge flow and help in linking up with international research networks. While Austria ranks third in the OECD for attracting foreign students (13.5 percent share of total students in 2003), it is less prominently positioned in advanced research programs for junior scientists with 8.75 percent.

Promoting researchers' mobility is one of the key priorities in the European Framework Programs. Within the "Marie Curie Actions" mobility and training programs, Austria was able to improve its standing from the lower third to a middle position within the EU-15.

Within the EU's "Researcher's Mobility Portal" initiative to inform scientists on legal, cultural, and administrative aspects of destination countries as well as fellowships, research grants, and jobs, Austria took the lead in implementing "Researcher's Mobility Portal Austria."

Women's promotion schemes

Although the women's share of students and university graduates had increased to over 50 percent in 2000, women are still underrepresented among university scientific staff: On the professorial level, the proportion of women rose from 6.9 to 10.1 percent from 2001 to 2005; for other scientific staff it increased from 26.6 to 28.5 percent. In non-academic research organizations in natural and technical science female scientists account for only 20 percent.

Promotion schemes (e.g., FEMtech-fFORTE) and legal measures enabled an increase of women's share in research and university teaching, but the report emphasizes the need to expand on the policy mix to further raise the awareness for women's promotion, and to provide suitable supporting conditions.

***

Barbara Schultze is currently working on completing her Ph.D. dissertation in international arbitration. She joined the OST from January to March 2007 as a visiting expert sent from the Austrian Federal Ministry of Economics and Labor.