Innovation, made in Switzerland

September 15, 2006

Brussels, 14 Sep 2006

Switzerland is one of Europe's top performers in innovation, sharing the all-star bench with the likes of Finland, Sweden, and Germany. However, signs of weaknesses are beginning to emerge in the country's innovation system which have led policymakers to stop and take stock of the system.. As part of this 'soul-searching' process, Switzerland is taking part in a new innovation policy-review publication series by OECD (Organisation for Economic Co-operation and Development). A report is expected in November.

At a Swiss Science Briefing in Brussels on 13 September, Christophe Caviezel, Director of the Swiss Commission for Technology and Innovation (CTI), spoke about the state of innovation in Switzerland and provided a sneak preview of some of the key findings from the OECD draft report.

On first inspection, Switzerland would appear to be providing the right conditions for the creation of a robust innovation system. In the 2005 European Innovation Scoreboard, it scored high in almost all the indicators and was ranked second overall just after Sweden and before Finland. The country also looks set to reach the Lisbon objective of spending 3 per cent of GDP on research, with current research and development (R&D) spending accounting for 2.9 per cent.

However, despite such high performance, 'Switzerland suffers from what best could be described as an overall lack of dynamism,' said Mr Caviezel who pointed to the slowdown in Switzerland's economic growth. Innovation has also been hampered by the low level of public money going to R&D, which experts say is only average by international standards, at about 0.65 per cent of GDP, compared to Sweden and Finland where public spending is well over the 1 per cent mark. 'This development is certainly contradictory to the international trend of increased public spending for R&D in most European countries and worldwide in developing countries,' he said.

But there is more than just a lack of dynamism. Switzerland also faces the challenge of growing technology convergence, the development of a knowledge economy and increased competition from emerging countries. Switzerland is traditionally specialised in mid-tech rather than high-tech sectors, which have by definition lower potential for innovation. Data suggests that the country missed out on developing a strong information and communicating technologies (ICT) sector in the 1990s which would explain why the country falls significantly behind Sweden and Finland in some of the innovation performance indicators.

With this in mind, the OECD draft report points to a number of areas where action is needed. The first is the structure of the system itself which the draft report finds to be 'a piecemeal rather than systemic approach to science, technology and innovation policy which reflects the current balance of power among actors more than society's longer terms needs.'

Indeed, innovation policymaking is distributed between the department for education and research and the department of economic affairs. A steering committee acts as an information exchange and discussion forum between the two. 'The task for Switzerland in the coming years is clearly to develop a vision for its innovation policy on a national, interagency scale,' said Mr Caviezel.' We hope to be able to launch the discussion this year..'

The draft report also points to the absence of direct public support for private sector R&D, which has led to a lack of 'demand orientation' in the country's innovation system. 'In fact, it [innovation policy] is so by design, as part of a liberal economic policy environment where state interventions in the economy are regarded with a very high degree of suspicion,' explained Mr Caviezel.

To tackle this deficit of public funding for private R&D, the draft report suggests setting up a pilot project to test the water for some specific support directed at increasing innovation activities in high-innovation firms. To increase demand-orientated R&D, a CTI initiative is already underway, which aims to bring industry and academy together in order to better identify supply and demand needs. However, 'the balance of supply - and demand- side measures in an innovation is by no means trivial. We will need some further policy experimentation in this area,' said Mr Caviezel.

Other areas highlighted by the draft report include the need to address challenges facing Swiss small and medium enterprises in the global economy, in particular the competition from emerging markets like China and India. 'The internalisation of R&D is already a fact,' said Mr Caviezel. 'A positive engagement with all the necessary prudence should be envisioned.' He referred to a recently launched CTO cooperation programme with China and South East Asian countries which he said SMEs with limited resources could benefit form enormously.

Mr Caviezel rounded off by emphasising that the budget for participation in the EU's Framework Programme for research does not crowd out resources available for national research and innovation programmes. Rather, budgets should be made available for both. This is a problem facing all participating countries in the Framework Programme, Mr Caviezel said. 'We believe only a well-funded and well-managed national system can be a good partner in a wider European Research Area.

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