and ensures that transport can continue to deliver its core role for a thriving European economy in a user-oriented, safe and environmentally-friendly way.
In conventional petrol-or diesel-powered vehicles, electronics improves fuel economy by managing the fuel injection,
'This is why we are opening our research funding to emerging economies. Supporting interesting and innovative research projects in the field of transport is a great way to start.
and will have positive knock-on effects that will benefit the world economy.''New instruments Three such projects have been launched under FP7, taking advantage of the SICA (Specific International Cooperation Actions) mechanism,
the introduction of new solutions and the creation of new markets this is key to the growth of business and also that of the national economy.
and large corporations to research and innovation are essential within almost all sectors of the economy.
and prosper only if there is the ongoing flow of new knowledge into the economy. Effectively, there are two main approaches to fostering economic growth
Dr. Zoltán Cséfalvay Minister of state for Parliamentary and Strategic Affairs Ministry for National Economy essential, especially when it comes to transforming those inventions
Dr. Zoltán Cséfalvay Minister of state for Parliamentary and Strategic Affairs Ministry for National Economy government to bet on the future,
And yet, the overall competitiveness of a country and its ability to catch up with the best performing economies is often significantly more dependent on the widespread distribution of existing technologies.
During the last decade competition in the world economy has become more fierce, and not just between economic blocks and countries,
In this case it is a competitive disadvantage that access to knowledge is limited territorially more than in the economies of the United states or Asia.
At the same time the planned decrease in the volume of university courses in economic-,legal-and social sciences may influence the innovation absorption capacity of the economy.
This is partly why the efficiency of R&d fund-16 1 overview of the situation 12 Török (2006) also draws attention to the fact that Hungarian RDI tries to play a strategic role in the national economy without a strategy.
this includes foreign working capital financing, advances in the structure of the economy, participation in global processes even amid economic-financial turbulence.
direction to advance the development of a knowledge-driven economy. Greece (2007) Chile (2008) Mexico (2007) 0, 50%0, 45%0, 40%0, 35%0, 30%0, 25%0, 20
and interests of economy and society towards R&d will still prevail. Brain drain, which is weakening public research.
No (or not enough) FDI based on RDI will be integrated adequately into the Hungarian economy. There will not be strengthened (enough) enterprises on the basis of national RDI.
the knowledge bases (all the knowledge bases of the universities and the Academy, the private sector and the nonprofit and community sectors) form the basis of the national innovation system, social and economic actors in the knowledge economy,
and sufficiently integrated into the economy Few market-driven development, the demand is tight: the big players compete with each other The shortcomings in KNOWLEDGE FLOW technology transfer
and the weaknesses of evidence-based decision-making processes) Gloomy macroeconomic prospects of the world economy and Hungary (
The RDI strategy provides the national frameworks and the research and development and innovation objectives of the economy and society.
however, the whole of the economy and the society does not gain from the yields of innovation 25 Identification of the problem
Mohnen 2009 The 17 most developed OECD countries 0. 1%increase in BERD can cause a 0. 3 0. 4%increase in the output of the national economy Bassanini Scarpetta
Finally the sustainable knowledge economy means such a knowledge-driven organizational system of economic processes that is sustainable from an environmental
The expansion of the‘green'economy plays an essential role regarding environmental sustainability longside economic growth.
and thus contribute significantly to enhancing the competitiveness of the Hungarian economy together with transforming it to a sustainable knowledge economy. 15 The policy considers it important that the companies with a Hungarian ownership background should get stronger
and the knowledge-driven economy and society can not be sustained without ensuring the framework conditions of basic research21.
increase the added value of the economy more intensively than the average, resulting in an increasing number of well-paid workplaces.
Thus the investment pays off and the added value of this sector grows significantly faster than average in the national economy.
The dual nature of economy weakens and the added value and the number of wellpaying jobs grow.
the (follower or adaptive) developments and innovations of mediumsized enterprises are required also for enhancing the competitiveness of the economy.
The research centres of international companies bring advanced knowledge to the national economy and also have an incentive effect on the national knowledge base.
thus contributing to the general improvement of society and economy. But an overall and really fundamental improvement in performance can only take place
and in the newly strengthened areas of Hungary are clearly positive (due to the effects of economy of scale) in relation to the process dynamics of growth based on R&d,
the specific dynamics of the key sectors of the national innovation system (health sector, food and energy economies) as well as the national integrated level itself. such methods of task definition which ensure not only the allocation
Efficient networked economy Globally competitive research centres+30 larger labs in the world elite A3.
invigorating the economy on the basis of RDI Figure 18 C8. Fast diffusion of adaptive innovations based mostly on ICT C9.
which make a return on investment at the level of the national economy, and are perfectly in line with the given phase of the life cycle (see Figure 21).
in order to tackle the problem of the dual economy (see Table 11). 4. 4. Instruments supporting the invigoration of public sector innovation The elaboration of separate RDI strategies
but can also fundamentally contribute to the strengthening performance of the Hungary economy by improving the health status of the population
Public funding of business R&d and its importance in the national economy Figure 22 00,5 1, 0 1, 5 2, 0 2, 5 3, 0 3
and also accept that the current funding structure can be regarded as stable in the long term then the improving R&d performance of the national economy can be ensured by increasing the business funding to around HUF 350 billion (from appr.
Based on international practice, this task is supported by an advisory body consisting of high-level independent professionals The governmental RDI strategy management tasks are managed by the ministry responsible for the economy.
OECD Economic Studies No. 33,2001/II. http://www. oecd. org/economy/productivityandlongtermgrowth/18450995. pdf Baumol, William (2005:
Innovation Policy and the Economy. MIT Press, Cambridge, MA, pp. 33-56. Baumol, William, Litan Robert and Schramm Carl (2007:
) in the economy of the Budapest Metropolis Region scientific report, December 2010 GKI Gazdaságkutató Zrt.
az innovációs rendszerek szinergiáinak térbelisége Measuring the knowledge based organization of the Hungarian economy: the spatiality of the synergies in the innovation systems Közgazdasági Szemle The Economic Review 55 León, L. R.,Simmonds, P. és Roman, L. 2012:
Dual economy: the co-existence of well capitalised, relatively modern, competitive, mainly foreign owned enterprises and Hungarian owned enterprises suffering from low competitiveness and a lack of capital.
The growth potential of national economy providing two-thirds of the employment is weak, it is not capable of technological development by itself,
which connects the economy, society and culture of every country in the world through real or virtual networks together.
to facilitate the knowledge-based European economy and enhance the competitiveness of the EU and its member states by strengthening their innovation capacities.
It takes into account the different innovation capacities of the regional economies. IUS (Innovation Union Scoreboard:
Its aim is the competitiveness enhancement and professional and business development of a certain area of the national economy.
diffusion of the accumulated knowledge in the institutional and corporate network and in the broader economy for the purpose of maximum utilization.
Operational Programme for Developing the Economy and Innovation FTE: Full-time-Equivalent IP: Intellectual Property R&d:
Ministry for National Economy NFM: Ministry of National Development OTKA: Hungarian Scientific research Fund OFTK: National Concept for Development and National Concept for Regional Development PCP:
System-dynamical approach 28 ábra National level Human resources human and social capital Science system research capacity The development of the economy and the markets absorption capacity
The project of national economic importance can have an invigorating effect on the economy through innovation
and significantly influencing the national and international knowledge flow can be started in the fields representing the strengths and important challenges of the Hungarian society and economy.
Objectives related to knowledge bases until 2020 GERD/GDP ratio Macroeconomic indicator based on international statistical standards The numerator is the own research and development expenditure aggregated at the level of the national economy
aggregated at the level of the national economy (Business Expenditure on Research and development, BERD) the denominator is the gross domestic product (Gross domestic product,
and economy at its meeting on 17 february 2010 to evaluate the 2007-2008 tasks of the STI programme of measures
Ministry for National Development and Economy-National Office for Research and Technology 27 tasks; Ministry of Education and Culture 20 tasks;
CSO databank, Forfás BERD 2003 and 2005 surveys Figure 1 also details the BERD intensity or relative importance of BERD to the national economy between 2003 and 2012.
CSO databank, Forfás BERD 2003 and 2005 surveys Figure 7 highlights the shift from a manufacturing to service economy between 2003 and 2011 in expenditure on R&d.
January 2013 A Review and Audit of Licenses Across Key Sectors of The irish Economy Forfás December 2012 Global Entrepreneurship Monitor (GEM) 2011 Global Entrepreneurship Monitor
commentary on Europe's economy focuses on its precarious financial system and anemic employment recovery since the Great Recession.
and government) throughout the European economy. Increasing productivity is the key way that countries can raise their per capita-income income.
ICT is a general purpose technology (GPT) that has wide-ranging effects throughout an entire economy,
because ICT-producing sectors alone are unlikely to provide significant productivity increases to the economy without the adoption of ICT in other sectors.
because while ICT investment provides large benefits for the broader economy, the nature of these benefits makes them hard for any single firm to capture;
The irish productivity gap with the U s. economy shrank from 35 percent in 1995 to 17 percent in 2013.2004-2013 Diverging Converging 1995-2004 Converging Finland Ireland Greece
Figure 5 illustrates the magnitude of convergence and divergence within the EU-13 as well as the relative sizes of the EU-13 economies. 2004-2013 Diverging Converging 1995-2004 Converging Bulgaria Czech-republic
when an economy shifts resources from less productive industries (e g.,, call centers) to more productive ones (e g.,
Indeed, new growth economics accounting suggests that the lion's share of productivity stems from the use of more and better tools. 30 PAGE 10 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 And in today's knowledge-based economy,
what economists call a general purpose technology (GPT). GPTS have appeared historically at a rate of once every half century,
what economies produce; how they produce it; how production is organized and managed; the location of productive activity;
they increase in sophistication as they diffuse throughout the economy; they engender extensive spillovers in the forms of externalities and technological complementarities;
since the mid-1990s through to 2014 have found positive and significant effects of ICT on productivity. 37 The beneficial effects of ICT on productivity have been found across different levels and sectors of economies, from firms to industries to entire economies,
First, in economies where ICT capital equipment innovations are new, they are able to pick off the low hanging fruit of relatively easy to improve efficiencies.
what economists call network externalities, which are the spillovers from adding additional users to a network.
50 Figure 7 shows contributions in both the total economy and private sectors for the EU-15 and the United states. An OECD report finds that the ICT contribution to value-added total factor productivity
Corry et al. find that the contribution from the knowledge economy, which includes labor composition, ICT capital,
and economy-wide levels, why has failed Europe to gain from ICT the way the United states has?
Recently, several prominent economists have argued that productivity growth in the United states is slowing down significantly for the foreseeable future.
While demographic shifts are important for the absolute size of the economy, they do not affect productivity or income per capita.
the techno-pessimists stand in stark contrast to other economists arguing that technological change will soon be progressing too quickly.
Shares of ICT investment as percent of nonresidential investment93 Economists see U s. ICT investment as a key reason the United states has maintained its place at the technological frontier as one of the most productive countries. 94 The effectiveness
because services are such a large part of the European (and U s.)economy, substantially higher productivity growth in manufacturing would not be sufficient to remedy the productivity slowdown. 100 Mas argues that it is the services
and the EU while in the US TFP improvements in the ICT producers sectors spilled over to the other sectors of the economy (especially the ICT intensive users),
Scale Economies Two additional reasons European firms lag in their investment in ICT capital are related to scale.
While the EU economy is larger than that of the United states, in practice it is integrated much less.
and Hitt find that firms that embrace new economy management practices (e g.,, decentralized decision-making) and at the same time invest significantly in ICT,
Rohman finds that the beneficial effects of the ICT sector for the broader European economy declined after the year 2000.149 Other recent evidence has shown that most of the productivity gains from ICT are due to ICT-using sectors.
like market and non-market services, make up a much larger part of developed-country economies than ICT-producing sectors,
so productivity gains in those sectors have a much larger effect on the whole economy. 150 There are many possible reasons why policymakers prioritize ICT industry growth over ICT usage.
For example, European officials look to the green economy for jobs, even though it will likely mean higher energy costs and lower productivity.
though, policymakers will have to make widespread adoption of ICT a policy priority across the entire EU economy.
S. A. ICT use effectict output effectpolicymakers will have to make widespread adoption of ICT a policy priority across the entire EU economy.
or in applying IT to other sectors of the economy, and PAGE 28 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JUNE 2014 whether promotion of the former through higher tariffs or other restrictions (like on cross-border data flows) will be detrimental to the latter.
any economy seeking success needs to prioritize across-the-board productivity growth strategies, rather than efforts to raise productivity by modestly expanding output in high-productivity sectors like ICT.
Economists have argued long that businesses under-invest in research, which is the rationale for governments instituting research grants
Economists have documented also significant market failures around IT investment, including network externalities and chicken-or-egg issues that slow digital transformation absent smart and supportive public policies. 165 Health care is a leading example.
procurement and regulation. 166 Use Tax and Trade policy to Spur ICT Investment It is only through investment in ICT that ICT innovation is diffused throughout the economy.
Some economists might question such policies, arguing that such tax incentives should only go to investments in areas like R&d where companies seldom capture all the benefits.
to an even greater degree than the United states, overemphasizes the role of small firms in the economy in rhetoric and in policy. 173 For many policymakers,
small firms have come to represent everything good in the economy. Yet, on average large firms are more productive,
simply keep the share of the economy produced by small businesses larger than it otherwise would be. 179 The latter policies not only slow the growth of larger firms,
One of the areas currently most at risk is digital Trade policies that lead to smaller firm size in an economy hurt productivity and income growth.
ENDNOTES 1. The Conference Board, Total Economy Database: January 2014 (total GDP EKS, labor productivity per hour worked EKS;
The Conference Board, Total Economy Database. 3. Ibid. 4. Ibid. 5. Ibid. 6. Mary O'Mahony and Bart van Ark, eds.
The Conference Board, Total Economy Database: January 2014 (Table 5; accessed April 2, 2014), http://www. conference-board. org/data/economydatabase/.
The Conference Board, Total Economy Database: January 2014 (total GDP EKS, labor productivity per hour worked EKS;
The Conference Board, Total Economy Database. Assuming 1. 6 percent productivity growth. 21. Ibid. Assuming yearly productivity growth for EU-15 after 1995 was the actual rate for the United states,
and Daniel Castro, The Internet Economy 25 Years After. com (Information technology and Innovation Foundation, March 2010), http://www. itif. org/publications/internet-economy-25
Robert D. Atkinson, The Past and Future of America's Economy: Long Waves of Innovation that Power Cycles of Growth (Northampton, Massachusetts:
Implications for the U s. Economy and U s Economic policy (presentation at ITIF Breakfast Forum, July 15, 2008), http://www. itif. org/files/2008-07-15-lipsey
Mika Maliranta and Petri Rouvinen, Productivity effects of ICT in Finnish business (discussion paper no. 852, Research Institute of the Finnish Economy, 2003). 44.
Vig, Information technology and the Indian Economy (Phd diss. University of Minnesota, March 2011), http://conservancy. umn. edu/bitstream/104630/1/Vig umn 0130e 11796. pdf. For public sector literature examples, see:
The Conference Board, Total Economy Database: January 2014 (Table 5; accessed April 2, 2014), http://www. conference-board. org/data/economydatabase/.
Matilde Mas, ICT and Productivity Growth in Advanced Economies (working paper, University of Valencia and Ivie, 2010). 102.
Bart Van Ark Measuring the New Economy, An International Comparative Perspective, Review of Income and Wealth 48 (2002): 1 14;
Small Is Not Beautiful, The Economist, March 3, 2012, http://www. economist. com/node/21548945.180. Murat Seker, Rigidities in Employment protection and Exporting, World Development 40, no. 2 (2012): 238 50.181.
The Race for Global Advantage (Yale, 2012) and The Past And Future Of America's Economy:
and the State New Economy Index series. Dr. Atkinson received his Ph d. in City and Regional Planning from the University of north carolina at chapel hill in 1989.
and further develop the knowledge-based economy. Most of the Innovation leaders and followers perform above the EU average,
The EU is improving its educational knowledge base showing that Europe is turning into a more knowledge-based economy.
Sigma-convergence occurs when the spread in innovation performance across a group of economies falls over time.
) and the higher education sector (HERD) Gross domestic product R&d expenditure represents one of the major drivers of economic growth in a knowledgebased economy.
and wealth of the EU. Research and development spending is essential for making the transition to a knowledge-based economy as well as for improving production technologies and stimulating growth.
Total employment in fast-growing enterprises in the business economy (without financial sector) The indicator shows the degree of innovativeness of successful entrepreneurial activities.
It captures the capacity of a country to transform its economy rapidly to take advantage of emerging demand.
and provide inputs to the innovative activities of other firms in all sectors of the economy.
Value of total trade The manufacturing trade balance reveals an economy's structural strengths and weaknesses in terms of technological intensity.
R&d expenditure represents one of the major drivers of economic growth in a knowledge-based economy. As such, trends in the R&d expenditure indicator provide key indications of the future competitiveness
and wealth of the EU. Research and development spending is essential for making the transition to a knowledge-based economy as well as for improving production technologies and stimulating growth.
and provide inputs to the innovative activities of other firms in all sectors of the economy.
Creating, exploiting and commercialising new technologies are vital for the competitiveness of a country in the modern economy.
Iceland R&d expenditure represents one of the major drivers of economic growth in a knowledge-based economy.
and wealth of the EU. Research and development spending is essential for making the transition to a knowledge-based economy as well as for improving production technologies and stimulating growth.
Creating, exploiting and commercializing new technologies are vital for the competitiveness of a country in the modern economy.
68: 104-112.23 Zuboff S. The emperor's new information economy. In: Orlikowski W, Walsham G, Jones M, et al, editors.
For example, until recently, R&d internationalisation has been limited to a small number of developing countries and economies in transition (UNCTAD 2005.
These sectors are seen as essential to advanced economies. Thus, policy makers fear that the potential loss of local inventive capacity in high-tech industries to other regions could harm their competitiveness
and undermine the state and development of their knowledge-based economies. Taking into account the gap in our understanding of the dynamics of global R&d organisation
the potential size of the economy should be taken also as a predictor of link formation among countries.
i e. distance, common language, the economy size, have expected the signs, though, in some cases are not significant.
'forthcoming in The World Economy. De Prato, G. & Nepelski, D. 2012.''Global technological collaboration network.
How Companies Win in the Knowledge Economy. Harvard Business Press. Dunning, J. 1988.''The Eclectic Paradigm of International Production:
the Japanese government, through the Ministry of Economy, Trade and Industry (METI), persuaded Sony, Hitachi and Toshiba to merge their advanced display businesses for small/medium screens to form Japan Display,
Clearly, venture investing fuels a substantial portion of the US economy. However, the USA has been much less successful in those technologies that require longer term investment and support such as robotics and displays.
Second, the legislature did not intervene as software was seen as a peripheral product, not central to an economy,
Today this is no longer the case as it is increasingly recognized that software is at the heart of the modern economy based on high technology and knowledge work.
health and demographic change, food security and the bio-economy with sustainable agriculture, the environment with clean energy and transport.
Yet, the theory of increasing returns, espoused by economists such as Arthur, explains why there may be other valid economic reasons for doing so (Arthur,
. eds) Innovation Policy and the Economy, The MIT Press, http://www. nber. org/chapters/c0203 Anderla, G.,et al (1997), Chaotics:
an Agenda for Business and Society in the 21st Century, Praeger, Greenwood, USA Arthur, W. B. 1994), Increasing Returns and Path Dependence in the Economy, University of michigan Press, Ann arbor, MI.
the End of Innocence at Apple computer, Penguin, New york. 56 Scitax Advisory Partners (2011), Overview of Research & development Tax Incentives in Selected Global Knowledge Economies, Ver.
cross licenses, patent pools and standard-setting, in Lerner, J.,Stern, S. and Jaffe, A. eds), Innovation Policy and the Economy, MIT Press for the NBER, Cambridge, MA.
Trompenaars, F. 1993), Riding the Waves of Culture, Economist Books, London. Verheul, I.,Bosmaa, N.,van der Nol, F. and Wong, T. 2002), Determinants of entrepreneurship in the United states of america, in Audretsch, D.,Thurik, R.,Verheul,
Xing website, www. xing. com Economist (2009) A spat among professional networks-Class war-Does local beat global in the professional-networking business?
and founded by the Bavarian Ministry for the Economy. KUKA and DLR have also been sponsored by the German Ministry of Education
not just nurturing robotics start-ups but introducing robots into the sector of the economy that uses them least today, SMES.
and encompass the aggregate economic activities of the commercial and manufacturing sectors of an economy. In this section, the composite EIPE Sub-Indicators (CSI), computed on the basis of the indicators corresponding to each activity,
For example, z-scores are used for the two composite indicators of the knowledge-based economy, published by the European commission in Key Figures 2003-2004,
'INFORMATION ECONOMY-SECTOR DEFINITIONS BASED ON THE INTERNATIONAL STANDARD INDUSTRY CLASSIFICATION (ISIC 4).'Paris: OECD. OECD 2008a.'
On the other hand, ICT-enabled innovation in ICT using sectors has provided the base for permanent and widespread growth-enhancing effects of ICT adoption throughout the economy.
meant to"reboot the EU economy "and to enable Europe's citizens and businesses to get the most out of digital technologies.
and the pervasive role of knowledge in the economy on the other, is affecting the spatial distribution of economic activity.
thus acknowledging the importance given today to the knowledge function in advanced economies. assessing the global internationalisation of the production
and global networking (the pipelines) for agglomeration economies. In addition, because of the study's policy context ICT R&d and Innovation, the proposed definition is explicitly technology specific:
and agglomeration economies foster a local business system towards a specialisation in both production and technology (Paci et al.,
These dynamics are exemplified by the economy's share of young fast-growing firms that fuel innovation, developing new goods or improving existing ones, services or processes (Veugelers, 2009.
and encompass the aggregate economic activities of the all sectors of an economy. At the most aggregate level,
and their owners produced by a wide range of nonofficial organizations that aim to capture the dynamism in the economy.
which gives rise to the notion of agglomeration economies (M. Fujita & Thisse, 2002; Krugman, 1991;
such as the homogeneity, complementarity or polarisation of regional economies. In the EIPE project, we make use of the first type of regional classification,
For example, z-scores are used for the two composite indicators of the knowledge-based economy published by the European commission on Key Figures 2003-2004, for the environmental sustainability index developed at Yale university,
The World Economy, 34 (8), 1417-1454. De La Tour, A.,Glachant, M, . & Ménière, Y. 2011).
How Companies Win in the Knowledge Economy: Harvard Business Press. Dumais, G.,Ellison, G, . & Glaeser, E. L. 2002).
and the Knowledge-Based Economy. Oxford: Oxford Scholarship Online Monographs. EC-JRC. 2005). ) Tools for Composite Indicators Building.
INFORMATION ECONOMY-SECTOR DEFINITIONS BASED ON THE INTERNATIONAL STANDARD INDUSTRY CLASSIFICATION (ISIC 4). Paris: OECD. OECD. 2008a.
The Emergence of the Knowledge Economy: A Regional Perspective (Advances in Spatial Science. Berlin: Springer.
The Magnitude And Causes Of Agglomeration Economies. Journal of Regional Science, 50 (1), 203-219.
"This study attempts to identify ICT R&d&i-related agglomeration economies in Europe that would meet world-level excellence,
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