| Abstract: |
The aim of the project is to analyze government support for innovation in a
comparative perspective by first examining the main existing instruments of
financial support for innovation in Turkey and Poland, and secondly to assess
their effectiveness by applying recent econometric techniques to firm-level
data for both countries obtained from the Community Innovation Survey (CIS).
Comparing Turkey to Poland is both meaningful and promising from a
policy-analysis point of view. Both countries are comparable in terms of
levels of economic development and technological capabilities, i.e. the
ability of their economies to create knowledge and exploit it commercially.
Both have undergone deep market-oriented reforms in the last decades – Turkey
since 1980, Poland since 1989 – resulting in a significant catching-up of
their economies. However, as the possibilities for further growth based on
structural change and eliminating obstacles to business are shrinking, the
problem of building a knowledge-based economy comes to the fore. In Turkey,
one can observe the growing popularity and the generous practices of public
incentives in industrial R&D and innovation, in addition to the recent trends
in public policies to support technological entrepreneurship and the
commercialization of research output. Since 2004, significant changes and
improvements have taken place in Turkey concerning science and technology
policy schemes that have actually influenced the national innovation system in
a number of ways. These include: an important increase in public support
provided to private R&D, the diversification of direct support programmes for
private R&D and innovation (which was tailored to the needs of potential
innovators), a widening of the scope of existing fiscal incentives for private
R&D activities and the implementation of new ones, the implementation of new
call-based grant programmes targeted at technology areas and industries based
on national priorities. Considering the large resource allocation for the
government involvement, there is a growing and urgent need for the systematic
monitoring and evaluation of R&D and innovation policies in Turkey. In Poland,
the science, technology and innovation (STI) policies were seen as less
important than other reforms (financial system, privatization, pensions etc.)
during the economic transition. The STI policies have lacked funding,
co-ordination and vision. The institutional Architecture has evolved with a
lack of continuity and a short institutional memory. A major breakthrough
occurred after 2004 when considerable funds for innovation were provided via
EU structural funds. The three principle areas of support were the creation of
technologies, technology absorption and indirect support. However, with
respect to public programmes targeting firms, technology absorption has
dominated all other instruments. Consequently, it is legitimate to ask whether
the EU funds are being spent in the best possible way, and in particular,
whether they contribute to the enhanced innovation performance of economy. To
assess the efficiency of public support, the same econometric methodology is
applied to the Turkish and Polish 2008 and 2010 editions of the Community
Innovation Survey for manufacturing firms. Two models are estimated: one
following the now classical CDM model and assessing the role of innovation
spending, but assuming government support to be exogenous, and another
controlling for the endogeneity of support but assuming a simplified version
of the innovation performance equation. Depending on data availability,
extensions of the analysis for both countries are offered: for Turkey the
estimation of a full-fledged CDM model and for Poland the analysis of panel
data for 2006-2010 and an assessment of the Efficiency of specific kinds of
public support. The evidence indicates that government support contributes to
higher innovation spending by firms and this in turn improves their chances to
introduce product innovations. The positive impact remains valid even when a
possibly non-random selection of firms for government support programmes is
controlled for. The extended analysis of Turkey has proved that there is a
positive relationship between innovation and firm productivity. On the other
hand, substantial differences between various kinds of public aid were
identified. In particular, support from local government proved inefficient or
less efficient than the support from central government or the European Union.
Moreover, in Poland, grants for investment in new machinery and equipment and
human resources upgrading proved to contribute significantly less to
innovation performance than support for R&D activities in firms. In terms of
policy recommendations, this report supports an increase in the volume of
innovation support and in the number of instruments used in Turkey. However, a
more specific analysis is needed to explain the inefficiency of support from
local government. The recommendation for Poland is to redesign the innovation
support schemes for firms so as to put more focus on R&D activities and the
development of truly new products and technologies |