W O R L D B A N K W O R K I N G P A P E R N O . 3 2 Innovation Systems World Bank Support of Science and Technology Development Vinod K. Goel Ekaterina Koryukin Mohini Bhatia Priyanka Agarwal THE WORLD BANK W O R L D B A N K W O R K I N G P A P E R N O . 3 2 Innovation Systems World Bank Support of Science and Technology Development Vinod K. Goel Ekaterina Koryukin Mohini Bhatia Priyanka Agarwal THE WORLD BANK Washington, D.C. Copyright © 2004 The International Bank for Reconstruction and Development / The World Bank 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. All rights reserved Manufactured in the United States of America First printing: April 2004 printed on recycled paper 1 2 3 4 06 05 04 World Bank Working Papers are published to communicate the results of the Bank's work to the development community with the least possible delay. The typescript of this paper therefore has not been prepared in accordance with the procedures appropriate to journal printed texts, and the World Bank accepts no responsibility for errors. Some sources cited in this paper may be informal documents that are not readily available. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and do not necessarily reflect the views of the Board of Executive Directors of the World Bank or the governments they represent. The World Bank cannot guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply on the part of the World Bank any judgment of the legal sta- tus of any territory or the endorsement or acceptance of such boundaries. The material in this publication is copyrighted. The World Bank encourages dissemination of its work and normally will grant permission for use. Permission to photocopy items for internal or personal use, for the internal or personal use of specific clients, or for educational classroom use, is granted by the World Bank, provided that the appropriate fee is paid. Please contact the Copyright Clearance Center before photocopying items. Copyright Clearance Center, Inc. 222 Rosewood Drive Danvers, MA 01923, U.S.A. Tel: 978-750-8400 · Fax: 978-750-4470. For permission to reprint individual articles or chapters, please fax your request with complete information to the Republication Department, Copyright Clearance Center, fax 978-750-4470. All other queries on rights and licenses should be addressed to the World Bank at the address above, or faxed to 202-522-2422. ISBN: 0-8213-5837-5 eISBN: 0-8213-5838-3 ISSN: 1726-5878 Vinod K. Goel is a Senior Consultant on Technology Development for the Private and Financial Sector Development Unit of the Europe and Central Asia Region at the World Bank. Ekaterina Koryukin is a Projects Officer at the same unit. Mohini Bhatia is a Consultant. Priyanka Agarwal was a Summer Intern (2003). Library of Congress Cataloging-in-Publication Data has been requested. TABLE OF CONTENTS Acknowledgments v Abbreviations vi Executive Summary 1 1. Introduction 5 2. Background 7 3. The Four Pillars of the Knowledge Economy 13 Policy and Institutional Framework 13 Innovation Systems 14 Financing R&D Development and Its Use by Industry 22 Education and Lifelong Learning 27 Information Infrastructure (ICT/e-Development) 28 4. Monitoring and Evaluation 31 5. Lessons 33 Annexes 37 Annex A. Knowledge Economy Project Menu 39 Annex B. Bank Innovation Support and Science and Technology Projects (1980­2003) 45 Background Papers and Materials 95 LIST OF BOXES 1 Bank Innovation Support and Science and Technology Projects (1980­2003) 8 2 The Four Pillars of the Knowledge Economy 14 3 Policy Reforms to support Innovations Agenda 15 4 India 15 5 Korea 17 6 Turkey 19 7 China 20 8 Chile 23 9 Mexico 24 10 IPR Case Study, National Chemical Laboratory, India 29 LIST OF FIGURES 1 Investment in Knowledge 10 2 R&D Expenditures by Source of Financing 22 3 Investment in Venture Capital 25 iii ACKNOWLEDGMENTS T his paper was prepared by a team comprising Vinod K. Goel, Ekaterina Koryukin and Mohini Bhatia. Priyanka Agarwal and Mohini Bhatia carried out the desk research during Fall 2003. Some of the findings came out of the project preparatory work done for the Croatia--Science and Technology Project. A menu for Knowledge Economy operations, included as Annex A, was devel- oped by the team to streamline the design of Knowledge Economy projects in the Europe and Central Asia Region. The project database (Annex B) was compiled using data in Image Bank. Special thanks are given to Anil Sood (Vice President, SFRVP, and Acting Director, ECSPF), and Sector Managers (ECSPF) who supported the team in the preparation and completion of this paper. The team is grateful to Dr. R. A. Mashelkar (Council of Scientific and Industrial Research, India), Dr. Sanjaya Lall (Oxford University, UK), Melvin Goldman (Cornell University, former Bank staff) and Lauritz Holm-Nielsen (Lead Education Specialist, the World Bank) who were peer reviewers for this paper. v ABBREVIATIONS CSIR Council for Scientific and Industrial Research, India ECU European Customs Union EU European Union FDI Foreign Direct Investment HR Human Resources ICT Information and Communication Technologies IFC International Finance Corporation IPR Intellectual Property Rights ISO International Standards Organization IT Information Technology ITP Industrial Technology Project KE Knowledge-based Economy M&E Monitoring and Evaluation MAM Marmara Research Center (Turkey) MIS Management Information Systems MSI Millennium Science Initiative MSTQ Metrology, Standards, Testing, and Quality NGO Non-governmental Organization PAL Programmatic Adjustment Loan R&D Research and Development RDI Research and Development Institution S&T Science and Technology SMEs Small and Medium-Size Enterprises STP Science and Technology Project TDF Technology Development Financing TI Technology Institution TSS Technology Support Services TTGV Technology Development Foundation of Turkey UME National Metrology Institute (Turkey) VC Venture Capital VCC Venture Capital Company VCF Venture Capital Fund WTO World Trade Organization vii EXECUTIVE SUMMARY T he capacity of a society to produce, select, adapt, and commercialize knowledge is critical for trade, competitiveness, and for the sustained growth of the economy. The World Bank's World Development Report 1999 states: Today's most technologically advanced economies are truly knowledge-based, . . . creating millions of knowledge-related jobs in an array of disciplines that have emerged overnight. . . . the need for devel- oping countries to increase their capacity to use knowledge cannot be overstated. Enhancing this capacity is becoming a prerequisite for improving productivity and increasing the welfare of society. The knowledge economy (KE) can be defined through analysis of four character- istic areas (the "four pillars" of the knowledge economy): (a) the policy and institutional framework; (b) an innovation system; (c) education and lifelong learning; and (d) information technology infrastructure and electronic development ("e-development"). The World Bank experience in promoting knowledge-based economies is dominated by projects focused on innovation systems support including science industrial technology development. The education and e-development aspects in relation to a knowledge-based economy are less explored. Through its knowledge economy policy and institutional framework the Bank has supported many KE programs, both in the form of investment projects that have made provisions for specific compo- nents and through adjustment operations that have included reforms of a general nature, the latter typically to enhance competitiveness, to ease information exchange, or to provide economic incen- tives for private sector participation in technology ventures. This paper concentrates on innovation systems support projects financed by the Bank during 1990­2003, together with a few successful earlier examples. It reviews some 51 projects involving over US$4.2 billion in Bank support, with individual projects ranging from US$3 million to US$300 million, mean project size has been about US$58 million. The Bank has gained significant experience and has an important role to play in supporting innovation systems projects. Examples of successful programs include those undertaken in the Republic of Korea, India, Indonesia, Turkey, Brazil, and Chile. The Bank's role typically has been to 1 2 WORLD BANK WORKING PAPER facilitate and augment reform efforts through its experiences around the world and play the role of an "honest broker" between the productive and S&T sectors in institutional reforms. On the institution-building side, the Bank contributes in its capacity as a facilitator of the reform process in bringing together relevant partners for each of the institutions that would advise and participate in building institutional capabilities. This enhances the effectiveness of the design and delivery of ser- vices and the sustainability of these activities for the future. The Bank's involvement also encourages that difficult measures are taken; including, for example, the raising of institutional accountability. Prudent market tests are applied to the various available interventions and fiscal discipline is imposed on institutions that are in the process of restructuring. Drawing on its experience in other countries the Bank can provide the long-term support, advice, and leverage needed during the restructuring phase for institutions that seek to attain greater fiscal independence and that seek to enhance the quality of their services and their contribution to the national economy. Innovation Systems Support The ultimate objective of a well-functioning innovation system is to serve the needs of the economy by achieving better integration of the science and technology (S&T) infrastructure with production needs, by increasing private sector participation in technology development, and by developing stronger linkages between industry, universities, and research institutions. Innovation system projects normally focus on building: an environment conducive to business development (putting in place, for example, key national policies, an intellectual property rights (IPR) regime, an appropriate quality and standards system, and a metrology system); a framework for the generation of new ideas (through tax incentives, IPR protection, and competitive research programs), support in determining the feasibility of research outputs and their subsequent commercialization (technology financing programs, IPR support), and support for the establishment of new businesses (venture capital, start-up funds); and enterprise-level support to establish new KE-based companies, to carry out research and development (R&D) activities, and to generate and sustain revenues (incubators, technology centers, technoparks). Measurements, standards, testing, and quality systems (MSTQ). A weak MSTQ system can impede industry's ability to compete effectively. Upgrading the framework for MSTQ thus often is a necessary first step in improving the innovation system (as well as being essential for World Trade Organization compliance and accession to the European Union). Many traditional S&T projects contain some com- ponents of MSTQ support; for example, setting up or upgrading institutes dealing with MSTQ, such as metrology organizations, standards institutions, and quality and accreditation councils. Bank pro- jects also pay special attention to separating the private and public aspects of MSTQ by privatizing (or setting up as private) income-generating entities such as testing laboratories and certification bodies and by centralizing functions of a public-good nature, such as national metrology institutes and national standards offices (and thus minimizing the conflicts of interest that arise where regulations are developed by the same entities that provide accreditation and certification). For example, the Turkey Industrial Technology Project upgraded the National Metrology Institute that will serve more than 80 percent of Turkish industry metrology needs, and the Indonesia Industrial Technology Devel- opment Project upgraded the National Metrology Center to provide better services to small and medium-size enterprises. Intellectual property rights (IPR) regime. An effective IPR regime is essential for commercializing research outputs and for technology transfer, especially after other reforms in S&T take hold, as well as for enhancing the competitiveness of industry. Many Bank projects have included IPR support in one form or another, from setting up or upgrading national-level patent offices to setting up individual INNOVATION SYSTEMS 3 IPR units in universities or research and development institutions. Other projects have supported the needs of research communities at the micro level or have trained patent agents, judges, and industry personnel. The Mexico Science and Technology Infrastructure Project, for example, supported the creation of the Mexican Institute of Industrial Property, significantly reducing delays in the award of patents, increasing enforcement activities, and increasing the frequency of inspections related to intellectual property violations. Chile's Science for the Knowledge Economy Project also aims to strengthen intellectual property rights regime, with an emphasis on patents. Similarly, the Turkey Industrial Technology Project has strengthened the Turkish Patent Institute to improve the IPR services. Research and Development Institutions (RDIs). The R&D sector in most developing countries typi- cally comprises a number of public institutions and a good academic base. These tend to be public- and inward-focused, however, and largely disconnected from the needs of industry. Most Bank S&T projects thus aim to strengthen and reorient public research and development institutes to serve the economy while preserving their public good nature. The objective of such effort is ultimately to make a shift in thinking so that Research and Development transforms into Research for Development, where "R" becomes socially meaningful when it leads to "D" and when output is inducted into socioeconomic system. Many projects have supported building a framework and appropriate incen- tives to encourage cooperation between the research community and industry, by, for example, enhancing the incentives for applied research, improving the marketing and commercialization func- tions of RDIs, introducing competitive research programs, promoting joint projects with industry, universities, and other R&D organizations, and introducing a strategic approach to the commercial- ization of R&D outputs. Traditional support to RDIs includes the upgrading of physical infrastruc- ture, the improvement of management information systems, and the modernization of management and human resources functions and other business processes. Successful examples include the several national R&D laboratories of the Council for Scientific and Industrial Research (CSIR) in India and the network of R&D institutes at the Marmara Research Center (MAM) in Turkey. Restructuring of both of these institutions increased the share of their contractual research that serves industry and consequently greater usage and adaptation of the R&D by the industry, and many other posi- tive spill-over effects for the economies of these countries. CSIR doubled its income from applied research and MAM increased the proportion of its research that supports industry to around 49 per- cent in 2003. Building up on the project accomplishments, India was able to attract large research contracts from outside of the country (for example, the largest General Electric's R&D center outside of the United States is located in India and employs about 2,000 people). Increase in applied research in India also gave boost to the development of the biotechnology sector resulting in India now hold- ing a prominent place worldwide (the United States leading) in the biotechnology development area. Upgrading innovation capabilities of enterprises. In addition to providing the infrastructure that enables the development of new ideas, it is important to provide a framework that also encourages the estab- lishment and nurturing of the knowledge-based companies that can bring these new ideas to com- mercialization. In this regard, Bank projects have: (a) helped finance the development of new ideas through technology financing institutions, technology financing programs, including the venture capital; (b) set up and helped develop knowledge-based companies through incubator programs and technology and R&D centers; and (c) helped existing companies to upgrade their capabilities and the quality of their services and products through the acquisition and adaptation of new technologies, by funding matching loan/grant schemes and outreach programs. Bank support for firm-level technology development typically has focused on technology financ- ing institutions and programs. Financing provided through such projects is typically low-interest, and in some cases is made in the form of grants. The financial instruments employed by Bank- supported technology financing entities include loans (no-interest, low-interest, commercial inter- est, and conditional), grants (usually matching grants), equity participation (sometimes through 4 WORLD BANK WORKING PAPER venture capital programs), royalties, and guarantees. Examples of technology financing programs included the Technology Development Financing program, the Technology Support Services pro- gram, and Venture Capital schemes supported by the Industrial Technology Project in Turkey; R&D Programs and venture capital schemes supported by the Industrial Technology Development Project in India, and earlier programs in the Republic of Korea. Monitoring and evaluation (M&E). Public support for technology sector is justified in large part by its public-good nature. As a consequence it is difficult to measure its value in the conventional terms of net present value or financial rate of return. That said, it is imperative that investments in this area be monitored for their ability to achieve the desired impact. The approach in many cases has been to carry out empirical analysis of benefits to the economy (growth of new businesses and exports, market share held by R&D companies, growth in R&D expenditure and foreign direct investment, and other indi- cators measuring spill-over effects); and to monitor project-specific performance indicators such as number of patents, number of joint with the industry projects, self-sufficiency ratios, and percent of R&D projects commercialized. Lessons. Technology projects normally include a spectrum of interventions that are complementary and holistic in nature. On the supply side, the projects reorient public research and development institutes toward industry, build up a functioning measurements, testing, standards and quality sys- tem to improve product competitiveness, and protect industry with an effective intellectual property rights regime. On the demand side, they support the use by industry of new technology, through technoparks, technology centers, and incubators, and provide financial support, through technology financing programs, venture capital, and start-up funds, for example. Technology projects as a result typically are complex, contain multiple components of complementary character, and must be run over the long term, frequently within a series of projects. The composition of S&T projects is unique for each country and may combine elements from any of these areas. Given the nature of technology development, and the newness in many countries of develop- ment activities, project design must include an appropriate degree of flexibility. For example, unallocated funds could be reassigned to priority activities that are performing well, pilot initiatives should be considered to determine the viability of different project components, and annual business plans should be periodically reviewed and updated. Private sector participation is important in the restructuring process for its ability to improve efficiency, management capability, and governance; to embrace stakeholder participation; and to deliver cost effectiveness in overall design and delivery. Bank programs also have welcomed cofi- nancing from the private sector and have found advisory boards with private sector representation to be particularly valuable in maintaining the business focus, such that delivers the maximum benefit for the economy. Finally, projects targeting the restructuring of the technology sector are typically labor- and resource-intensive and require strong championship within the government and institutions. This is true for all Bank projects, but especially so for technology related ones given the difficult nature of the reforms and possible resistance within the R&D community, as well as the fact that innovation agenda may be put off the priority lists of busy governments struggling with budget deficits and other macro-economic difficulties. This also makes intensive supervision by experienced Bank staff, continuity and flexibility even more important if the projects are to achieve a lasting change in the mindset of the host country institutions. CHAPTER 1 INTRODUCTION I nnovation systems and science and technology (S&T) projects supported by the World Bank have taken on many forms in the past several years. The Bank's involvement in industrial tech- nology projects started in the 1970s, with Israel and Spain numbering among the first coun- tries to receive support in the form of industrial technology development.1 This paper reviews the lessons learned in S&T projects that have been supported by the Bank, with an emphasis on the examples of the past decade (1989­2003). Projects and their components were included in this review if their objectives included the use of scientific and technological knowledge to improve development. The review included 51 project, in an aggregate amount of over US$4.2 billion; this did not include agricultural research projects where the Bank supported a significant amount of projects world-wide. The amounts invested in individual projects ranged from US$3 million to US$300 million, with a mean project size of about US$58 million. This paper first discusses the concept of the knowledge-based economy (KE) and its relation with the S&T sector, and then identifies the main themes of KE projects, groups them by the four pillars of the knowledge economy, and summarizes the key lessons learned. Since the Bank experi- ence is most substantial in the areas of innovation systems and related policy frameworks, this review focuses on industrial technology development and on building national innovation systems. It touches only briefly on the themes of education, and information and communications technol- ogy, with the aim only of providing the proper context for the main study. A List of Projects is included in Box 1, and brief descriptions of these projects in Annex B to this report. 1. The term "R&D" describes "Applied R&D" and the terms "R&D" and "Technology Development" are used interchangeably throughout this paper. 5 CHAPTER 2 BACKGROUND T he knowledge economy. The capacity of a society to produce, select, adapt, and commercial- ize knowledge is critical for trade, competitiveness, sustained economic growth, and qual- ity of life. The World Bank's World Development Report 1999 states that: Today's most technologically advanced economies are truly knowledge-based, . . . creating millions of knowledge-related jobs in an array of disciplines that have emerged overnight. . . . [T]he need for developing countries to increase their capacity to use knowledge cannot be overstated. Enhancing this capacity is becoming a prerequisite for improving productivity and the welfare of society. The Organization for Economic Cooperation and Development (OECD) similarly has concluded that the "underlying long-term growth rates in OECD economies depend on maintain- ing and expanding the knowledge base." As the last few decades have shown, two strong simultaneous shifts in the global economy have led to knowledge becoming a key factor of production. First, the Internet revolution has greatly reduced the cost and increased the capacity of firms and organizations to store, process, manipu- late, and distribute information. Second, globalization has opened domestic industry to interna- tional competition, making the ability to compete in global markets vital for long-term success. As information becomes more accessible and less expensive, and as globalization becomes an inte- grated part of competition, the skills and competencies relating to the selection and efficient use of knowledge are becoming more critical. A handful of the world's richest countries produce the overwhelming majority of new scientific and technological knowledge, and it is these countries that derive the greatest benefit from its use (OECD 2003; see Figure 1). Most of the rest of the world's nations are struggling, with varying degrees of success, to establish scientific and technological research systems able to invigorate their economies and provide solutions to their social needs. Unfortunately for developing countries, globalization and the information revolution favor the scientifically strong. Countries that want to improve their knowledge base face a huge task to close the gap that separates them from scientifi- cally advanced countries. 7 8 WORLD BANK WORKING PAPER BOX 1: BANK: SCIENCE AND TECHNOLOGY PROJECTS (1989­2003) Loan Amt. Fiscal Year Region Country Project US$ million under prep ECA Croatia Science and Technology Project 38.0 under prep ECA Turkey Knowledge and Innovation Project 100.0 under prep ECA Russia Technology Commercialization Project 50.0 under prep ECA Romania Knowledge Economy Project 50.0 2003 ECA Ukraine eDevelopment Project 5.0 2003 LAC Honduras Trade Facilitation and Productivity Enhancement 25.0 Project 2003 LAC Chile Science for the Knowledge Economy Project 25.0 2003 AFR Congo Private Sector Development and Competitiveness 12.0 Project 2003 SAR India Technical Engineering Education Quality 250.0 Improvement Project 2002 MNA Yemen Higher Education Project 5.0 2002 EAP Indonesia Global Distance Learning Network Project 2.6 2002 MNA Egypt Higher Education Enhancement Project 50.0 2002 ECA Armenia Enterprise Incubator Project 5.0 2001 LAC Nicaragua Competitiveness Project 50.0 2001 LAC Venezuela Millennium Science Initiative 5.0 2000 LAC Chile Millennium Science Initiative 5.0 2000 ECA Turkey Industrial Technology Project 155.0 2000 EAP China Higher Education Reform Project 50.0 1999 LAC Chile Higher Education Improvement Project 145.5 1999 LAC Mexico Knowledge and Innovation Project 300.0 1998 LAC Brazil Science and Technology Reform Support Project 155.0 1998 EAP Indonesia Information Infrastructure Development Project 34.5 1997 EAP Thailand Secondary Education Quality Improvement Project 194.7 1996 ECA Russia Standards Development Project 24.0 1996 EAP Thailand Universities Science and Engineering Education Project 143.4 1996 EAP Indonesia Industrial Technology Development Project 38.5 1996 EAP China Technology Development Project 200.0 1996 AFR Mauritius Higher and Technical Education Project 16.0 1995 AFR Ghana Private Sector Development Project 13.0 1995 LAC Brazil Science and Technology Subprogram: Science Centers 15.8 and Directed Research 1995 EAP Indonesia Second Professional Human Resource Development Project 69.0 1995 EAP Indonesia University Research for Graduate Education Project 58.9 1995 AFR Mauritius Competitiveness Enhancement Project 6.7 1994 EAP Korea Science and Technical Education Project 190.0 1994 EAP Malaysia Polytechnic Development Project 107.0 1993 MNA Tunisia Higher Education Restructuring Project 75.0 1993 LAC Mexico Science and Technology Infrastructure 189.0 1993 EAP Korea Science Education and Libraries Computerization 50.0 Project 1992 EAP Philippines Engineering and Science Education Project 85.0 (continued ) INNOVATION SYSTEMS 9 BOX 1: BANK: SCIENCE AND TECHNOLOGY PROJECTS (1989­2003) (Continued) Loan Amt. Fiscal Year Region Country Project US$ million 1992 ECA Turkey Technology Development Project 100.0 1992 AFR Kenya Universities Investment Project 55.0 1991 MNA Algeria Science and Technology University Development 65.0 Project 1991 EAP China Rural Industrial Technology (SPARK) Project 95.1 1991 ECA Hungary Human Resources Development Project 150.0 1991 LAC Brazil Science and Research Development Project 150.0 1991 EAP Korea Third Technology Advancement Project 60.0 1990 EAP Korea Universities Science and Technology Project 45.0 1990 SAR India Industrial Technology Project 200.0 1989 ECA Hungary Third Industrial Restructuring Project 140.0 1985 EAP Korea Second Technology Development Project 50.0 1982 EAP Korea First Technology Development Project 50.0 1979 EAP Korea Korea Electronics Technology Project 29.0 Total Funding 4,253 The term "Knowledge Economy" is used to describe the new economic environment in which innovation and knowledge are replacing capital and labor as the primary wealth-creating assets. The creation and use of knowledge is not necessarily focused only on the high-technology indus- tries, however--all industries need to use technology to maintain their competitiveness. Even in the more traditional agricultural and manufacturing sectors, knowledge (about crop varieties, new markets, or innovative production processes) is becoming more easily and rapidly accessible on a global basis, and its competitive value thus is increasing. For the more sophisticated economies, the next step in enhancing their competitiveness lies in creating an environment conducive to the tran- sition of concepts and new ideas to real products. This requires a reorientation toward market industry and a well-functioning national innovation system, together with the integration of research and development institutions, universities and academia, and the private business sector. An example of a region-wide initiative to become a knowledge-based society is the European Union's Lisbon Strategy.2 Three priorities that have been identified by the Lisbon Strategy in this area include improving investment in networks and knowledge, strengthening competitiveness in industry and services, and promoting life-long learning. Following the strategy, while a lot more work would need to be done to achieve the goals, the EU countries have achieved some progress: 6 million jobs created since 1999, in spite of the economic slowdown; significant improvements in long-term unemployment and the rate of female employment; opening up to competition of sev- eral strategic network markets (such as telecommunications, energy, and rail freight); internet take- up in schools, businesses, public administrations and households. The primary focus for all countries at all stages of development toward a knowledge-based economy must be to build on their competitive advantage. For example, in the late 1980s Fin- land's economy was predominantly based on the forest industry (76 percent of Finland is forest) and was as a consequence vulnerable to the cyclical nature of the raw materials. Exports accounted for about 5 percent of GDP. Through large investment in R&D and a policy of innovation, Fin- 2. The Lisbon Strategy is a commitment to bring about economic, social and environmental renewal in the European Union. In March 2000, the European Council in Lisbon set out a ten-year strategy to make the EU the world's most dynamic and competitive economy. 10 WORLD BANK WORKING PAPER FIGURE 1: INVESTMENT IN KNOWLEDGE As a percentage of GDP, 2000 R&D Software Higher education 9.7 Sweden 6.1 United States1 8.8 Finland n.a. Korea 4.0 Canada1 4.0 Switzerland 7.6 Denmark (1999)2 4 4.5 OECD (1999)3, 4.3 Germany 6.0 Netherlands 3.4 Japan1 4.6 France n.a. Belgium (1999)5 5.0 United Kingdom 4.5 Australia 7 4.2 EU6, 6.7 Austria 6.8 Norway n.a. Czech Republic 10.8 Ireland 3.4 Hungary 6.4 Spain n.a. Slovak Republic (1999) 1.8 Italy 8.3 Portugal Average annual n.a. growth rate Poland n.a. 1992-2000 Mexico (1999) 8.8 Greece (1999)2 8 6 4 2 0 % Source: OECD, Science, Technology and Industry Scorecard 2003. Copyright OECD 2003. http://www1.oecd.org/publications/e-book/92-2003-04-1-7294/pdf/A1.pdf land has expanded and diversified its exports to include the supply of wood and paper products and machinery, and exports now make up 20 percent of GDP. The country furthermore has captured a 20 percent global market share in the wood and paper industry (Finnish Forest Industries Federa- tion 2003). Finland's achievements were particularly unique due to the simultaneous expansion in the high-technology industry as well, with Nokia. Finland has surpassed the US, according to latest OECD indicators (2003) in certain sectors such as size and growth of the information and com- munications technologies (ICT) sector, price of Internet access, high-skilled ICT workers for the information economy, scientific publications, and even in number of researchers per total employ- ment (OECD 2003). The challenge of achieving a turnaround as dramatic as Finland's may be very difficult for smaller countries than larger ones. In larger countries, the focus should be on regional develop- INNOVATION SYSTEMS 11 ment; for example, parts of India are among the poorest in the world, but the country also has a dynamic and fast-growing information technology software and service industry. This largely became possible due to the promotion of excellent education as well as willingness of the Govern- ment of India to permit in mid-1990s liberalized captive satellite communications by companies exporting IT services and products. The National Association of Software and Service Companies today estimates that Indian software and services sector will post a 28 percent growth in 2003­04 at $12 billion in revenues, compared to $9.5 billion in 2002­03. The sector's annual exports are worth around US$8 billion in 2003, accounting for 16 percent of all exports, and are growing rapidly and are expected to reach US$50 billion this decade. Larger developing countries must identify and build on pockets of development such as this where the country may have a compara- tive advantage: industrial base, cultural background and human resource base, entrepreneurial skills, or economic and political systems. Building Innovations Systems: The World Bank experience. The Bank has significant experience in technology projects, through successful programs in countries including India (Box 4), the Republic of Korea (Box 5), Turkey (Box 6), Spain, Israel, Indonesia, Brazil, China (Box 7), Chile (Box 8), and Mexico (Box 9), and has an important role to play in supporting future projects. Annex A, a Menu of Operations, includes a list of possible activities that have been and may be supported in the future by the Bank projects; composition of each project would be unique depending on the country needs. The Bank's engagement in industrial technology projects began in the 1970s with a component in Israel's Industrial Development Loan, approved in 1975, to improve product design and production processes to reorient industry toward exports. The Bank's first complete project for industrial technology was in Spain, this time aimed to improve the import and use of technologies to raise competitiveness and increase exports. A series of projects followed. The Korea Electronics Technology Project, approved in 1979, aimed to reorient the Republic of Korea's R&D sector toward the semiconductor industry and led to a series of industrial technology development and technical training projects; and in the 1980s projects were initiated in China and Indonesia to build R&D capacity through an emphasis on higher education and technical training. The initial projects in Spain and Korea were implemented by public institutions; one of obstacles faced in these projects resulted from not having private sector financing handled by independent bodies with professional management and banking capabilities. Heeding this lesson, in the 1980s the Bank changed the way that it supported these types of projects. Bank involvement instead aimed to help catalyze private sector participation in technology development, shifting the emphasis away from a public-sector- driven and less efficient approach to one driven by the needs of industry and the economy. Cur- rently, the Bank is engaged in preparation of the second-generation projects targeted at building knowledge-based economies in Croatia, Turkey, Bulgaria, Romania, and other countries. These projects, in addition to more traditional policy reforms and innovation support activities, include support for e-Development, e-Government and other aspects to improve information flows and transparency. The Bank's role typically has been to accelerate and augment reform efforts through its experi- ences around the world and play the role of an "honest broker" between the public productive and S&T sectors in institutional reforms. On the institution-building side, the Bank contributes in its capacity as a facilitator of the reform process in bringing together relevant partners for each of the institutions that would advise and participate in building institutional capabilities. This enhances the effectiveness of the design and delivery of services and the sustainability of these activities for the future. The Bank's involvement also encourages that difficult measures are taken; including, for example, the raising of institutional accountability. Prudent market tests are applied to the various available interventions and fiscal discipline is imposed on institutions that are in the process of restructuring. Drawing on its experience in other countries the Bank can provide the long-term support, advice, and leverage needed during the restructuring phase for institutions that seek to attain greater fiscal independence and that seek to enhance the quality of their services and their contribution to the national economy. 12 WORLD BANK WORKING PAPER The underlying themes of efforts to improve the innovation capacity of an economy have been the introduction of market competition, the development of exports, efforts to attract foreign direct investment, and efforts to promote and protect local ideas and inventions. The work done in these areas has included the upgrading of technological capability at the enterprise level, to incor- porate foreign technologies and processes; standardization of processes; skills upgrading of the workforce; and the building of local entrepreneurial capabilities. This has required a shift in the incentive framework for applied research, the development of linkages between R&D community and industry, the financing of innovation, and a shift from a supply-side-driven R&D approach to a demand-driven one. In most countries where S&T projects of this nature have been launched, liberalization reforms also have been underway, in turn also raising expectations for an increase in demand for R&D services and products. Bank assistance in the knowledge-based economy arena has included not only assistance in developing the private and financial sectors, but also significant work in the agriculture sector and education. In a number of countries the Bank also has supported the development of information and communications technologies (ICT) infrastructure. The Bank's most diverse and substantial experience has come in the innovation, science and technology development, however, where it has supported the upgrading of intellectual property rights regimes, the improvement of measurements, standards, testing, and quality systems, and the restructuring of research and development institu- tions and has provided assistance to enterprises to develop, adapt, use, and commercialize new tech- nologies. The Bank has also supported the setting up of technoparks and venture capital funds. The support of innovation development is effective and more sustainable if it is accompanied by appro- priate adjustments in the policy framework and by the introduction of economic incentives, as well as by coordinated efforts to reorient education and training toward industry needs. A good ICT backbone is also crucial if such interventions are to fully realize their potential. There is a wide number of proponents of knowledge economy projects in the Bank and a lot of support has been provided to the teams working in this area in the recent years including setting the arena for cross sector collaboration between the regions, sectors and networks across the Bank, the bulk of analytical research carried out to-date, and such regional initiatives as analytical framework set by the Regional Chief Economist's (for the Latin America and Caribbean Region) recent Flag- ship Reports (De Ferranti et al. 2003). While the stages and main focus of innovation support pro- jects vary across the World they all follow the same goal of setting the framework and incentives to stimulate industry upgrading through use of better technologies, allow wider access to pertinent information for citizens in order to contribute to making more efficient use of public resources, and, ultimately, to economic growth. The text boxes interspersed throughout this paper further describe activities and projects from a country-based view, outlining how different countries have created institutions, implemented major reforms, and strengthened their innovation capacity through partnerships with the World Bank. CHAPTER 3 THE FOUR PILLARS OF THE KNOWLEDGE ECONOMY T he growth of a global knowledge-based economy creates great opportunities and poses inter- esting challenges for all countries, but particularly for those that are struggling to combat widespread poverty and to promote sustainable development, those with weak political, administrative, and economic institutions, and those dealing with the difficult transition from a cen- tralized to a market economy. To take advantage of the opportunities and navigate these risks, a country must undergo major reform. First, it must develop a coherent, multifaceted national strategy for building and sustaining a knowledge-based economy. Key to this strategy is development of a mindset that is open to change and knowledge sharing. Second, it must provide the environment, including infrastructure for the networking and sharing of knowledge, to ensure cooperation and coordination between and the balanced development of key sectors of the economy. Third, it must develop and implement this strategy in a participatory, broad-based fashion that includes and empowers all major sectors of society, including the private sector, educators, scientists and innova- tors, civil society, the media, and others. These strategic reforms may be classified under the "four pillars" of the knowledge economy (Dahlman 1999; see Box 2). The full integration of the four pillars of the knowledge economy is the key means by which a country can enhance its competitiveness in international markets and propel its economy toward its maximum social, political, and economic potential. The focus of this paper is to elaborate on Inno- vation systems development pillar and related policy frameworks, while touching only briefly on the themes of education and information and communication technology. Policy and Institutional Framework Reforms always need a solid support on the policy level to take root. The support of a country's eco- nomic development would ultimately include policy reforms to promote competition, ease of exit and entry of firms, deepen financial sector, reform enterprise sector, modernize tax system, promote foreign direct investment, rule of law, open trade, flexible labor market, etc. The policy framework of a knowledge-based society in its turn would focus on elements that allow free information flows among the governments, businesses and citizens, provide incentive for private sector participation in different sectors, stimulate public and private sector collaboration to serve the needs of the economy, 13 14 WORLD BANK WORKING PAPER BOX 2: THE FOUR PILLARS OF A KNOWLEDGE ECONOMY Policy and Institutional Framework. Creating an appropriate economic incentive and institutional regime that encourages the widespread and efficient use of local and global knowledge in all sectors of the economy, that fosters entrepreneurship, and that permits and supports the economic and social transformations engendered by the knowledge revolution. Innovation System. Creating an efficient innovation system and business environment that encourages innova- tion and entrepreneurship, comprising firms, science and research centers, universities, think tanks, and other organizations that can tap into and contribute to the growing stock of global knowledge, that can adapt it to local needs, and that can use it to create new products, services, and ways of doing business. Education and Training. Creating a society of skilled, flexible, and creative people, with opportunities for a good education and life-long learning available to all, and a flexible and appropriate mix of public and private funding. Information Infrastructure (ICT/e-Development). Building a dynamic information infrastructure and a com- petitive and innovative information sector that fosters a variety of efficient and competitive ICT services and tools, available for all sectors of society. This includes not only high-end technologies such as the Internet and mobile telephony, but also radio, television, and other media; computers and other devices for storing, processing, and using information; and a range of communication services. and promote business opportunities, investments and growth. The Innovation System reform then would step in to build and modernize intellectual property rights regime and measurement, testing, standards, and quality systems, restructure research and development institutions, provide incentives to the industry and small and medium enterprises to use, adapt and develop new technologies, as well as stimulate development of various mechanisms to finance the technology (Box 3). While broad policy reforms such as business environment could be an agenda on its own, the knowledge- economy, and innovation systems policy reforms in particular, are better supported as components and conditionality of investment projects and reinforced within larger adjustment and program- matic operations. Innovation Systems Knowledge is transformed into goods and services through a country's national innovation system. Its benefits become evident when it is employed within a complementary system of: (a) knowledge- producing organizations in the education and training system, such as universities and research insti- tutes; (b) macroeconomic and regulatory framework, including trade policies that affect technology diffusion; (c) communications infrastructure; and (d) diverse other factors, such as access to the global knowledge base. The ultimate objective of a well-functioning innovation system is to serve the needs of the economy by achieving full integration of S&T infrastructure with the production base, by increasing private sector participation in innovation and technology development, and by developing strong linkages between industry, universities, and research institutions. National innovation systems are effective only to the extent that the different elements work in harmony, however. A multi-pronged structure must be built to support national innovation from the birth of an idea to its ultimate commercialization and production. The environment must be conducive to entrepreneurship, with key national policies, intellectual property rights protection, and an appropriate system of standards and quality in place. There must be a functioning frame- work for the generation of new ideas by research institutions, universities, and private firms, as well as for the industry using these research products. Financing must be available for the enterprises to use, adapt, and develop new technologies, as well as there must be a framework to support the establishment, and sustainability of knowledge-based firms. There is a tendency among most countries to concentrate on adjusting input parameters, such as the number of researchers. While such structural enhancements may be necessary they are not BOX 3: MAIN POLICY REFORMS TO SUPPORT INNOVATIONS AGENDA Intellectual Property Rights and Measurement, Testing, Standards and Quality: Provide laws and regulations to be compatible with international and regional practices. Research and Development Institutions (RDIs): Create conducive environment for public RDIs and their staff to engage in contractual research and com- mercialization of R&D; Provide RDIs with appropriate flexibility and autonomy in managing their activities, including budget allo- cation and human resources (including hiring and promotion of scientists); Introduce incentives for applied research and financial sustainability; Consolidate R&D system to be more efficient and less burdensome on the public budget; Reform relevant laws to enhance the framework for R&D and innovation: decentralizing the management and financing of higher education institutions and programs, reducing university and research institute fragmentation, and developing quality control for these institutions and programs Incentives for Industry (especially SMEs) to develop, adapt and commercialize new technologies: Promote growth of knowledge-based companies and commercialization of research outputs; R&D tax incentives, upgrade labor skills, reform of public procurement, technology parks, incubators. Financing Instruments to support technology development: Provide appropriate legal and regulatory framework and business environment for potential investors; Create technology financing institutions, R&D financing instruments--such as loans, equity, venture capital, and start-up funds, etc. BOX 4: INDIA Industrial Technology Development Project Project approved: December 1989. Project completed: June 1998. Loan: US$200 million The objective of this project was to facilitate the acquisition and development of technology by industrial firms in India. It aimed to balance existing domestic technological capability with the import of foreign technology, and to reduce the financial constraints on new technology ventures and the foreign exchange constraint on technology imports. The project helped small, innovative firms obtain financing by supporting the development of venture capital in India, in the form of six VC companies managing nine VC funds. These VC companies invested in more than 300 firms, producing returns that have averaged 18­20 percent. The project in essence launched the VC industry in India, but its indirect contribution--introducing a culture of risk finance and thus attracting foreign venture capitalists to India--may have been equally important. The project additionally supported the upgrading of RDIs, providing technology services to industry and promoting collaboration between industry and research institutions. The project provided loans rather than grants, forcing the borrower institutions to focus on their financial management and rates of return. A number of research institutes were able to modernize and upgrade their physical facilities, enabling them to enter new areas of research and to reorient themselves to serve indus- try. Finally, the project also financed the importation of technology and technical know-how by supporting the fast-track Technology Development Fund, which put forward US$100 million to benefit 600­800 firms. Technical Education Engineering Quality Improvement Project Project approved: 2003. Loan: US$250 million This project aims to improve the quality of engineering institutions throughout India. The country has six Indian Institutes of Technology (IITs) that every year send large percent of their graduates to work for foreign multina- tionals, both in India or abroad. Initially the project proposed increasing the number of IITs in India, but based on Mashelkar Committee report it was determined that upgrading existing regional engineering and technical institu- tions would be more resource-efficient and would produce a wider supply of qualified specialists to better meet the needs of industry. The institutions are being selected based on their willingness to accept academic, financial, managerial, and administrative autonomy, increase cost-recovery ratios, etc. The number of institutions to be selected is expected to be 20­25. 16 WORLD BANK WORKING PAPER sufficient for the successful creation of an innovating economy. A shift in thinking toward output parameters, such as the share of exports held by high-value-added products, is required. Bank inter- ventions in the building of innovation systems have been comprehensive. They have included the upgrading of measurements, standards, testing and quality systems; the creation of institutional infrastructure for quality enhancement and certification; alignment of technology regulations with World Trade Organization standards and regional requirements, such as the European Customs Union standards; strengthening of intellectual property rights regimes; restructuring of public research and development institutions; supporting technology financing programs and technical assistance grants; establishment of venture capital funds; and support of firm-level innovation and technology development, including establishment of technology centers and technoparks. Much of this has been achieved with significant private sector participation. Project outcomes have varied with the country context and development objectives. The innovation system has been successful in several cases where it has used institutional linkages, international participation, and a systemic approach to move ideas from concept to product. In other cases the reform process has set broader objectives requiring technology institutions and scientists to respond to changed incentives, such as reorienting research toward applications and industry needs, increasing the amount of contractual research, and building international linkages and other goals. In such cases the momentum and commitment have needed to be mainstreamed for wide acceptance. For example, the Republic of Korea's Technology Development Project has advanced to a third stage in a series that was initiated in the early 1980s when the Bank and the government set up the Korea Technology Development Corporation (KTDC). In its first 10 years of operation KTDC assisted nearly 3,000 projects in their technology needs. The approved funding amounted to about US$830 million (both from the Government and the Bank), 73 percent of which went to in-house research activities, 2 percent to technology imports, 23 percent to commercialization, and 2 percent to the purchase of research equipment. Measurements, Standards, Testing and Quality (MSTQ) system. A weak MSTQ system can impede industry's ability to compete. The demand for reliable MSTQ services is expected to increase in the future, despite an evident lack of awareness among companies of the potential benefits of quality certification and standardization. Upgrading the framework for MSTQ is a basic requirement and a first step in improving the innovation system--as it helps level the playing field, in international terms. A strong MSTQ system furthermore is necessary for World Trade Organization compliance and other regional requirements, such as accession to the European Union, for example. Many S&T projects contain a component of such a system, through the setting up or upgrading of institutions: the first Technology Development Project in Turkey resulted in the setting up of the National Metrology Institute (UME) that on com- pletion of the project (in 1998) was capable of meeting roughly 30­40 percent of Turkish industry's metrology needs. The follow-up Industrial Technology Project, which continued the upgrade of UME, has enabled it to meet 80 percent of metrology needs in the country by early 2004 (expected to grow to 96 percent by 2006). The project provided investments into both upgrade of Turkey's metrology physical infrastructure (building new laboratories and purchasing up-to-date equipment) but also modernizing its management structure and busi- ness processes and marketing capabilities. The setting up of this metrology center has greatly enhanced measurement capabilities in Turkey, lowering the costs of metrology to firms and making measurement facilities available locally to smaller firms that would not otherwise have used them. The Turkish Standards Institute additionally was strengthened through the setting up of the Quality Campus in Istanbul and staff training and technical assistance. The expansion and upgrading of the country's standards infrastructure has helped industrial competitiveness by improving quality standards and providing internationally acceptable certification to Turkish exporters. Similarly, Indonesia's Industrial Technology Development Project upgraded the National Metrology Center to provide better service to small and medium enterprises. Russia's INNOVATION SYSTEMS 17 Standards Development Project, Brazil's Science and Technology Reform Support Project, and China's Technology Development Project also included components for the upgrading of metrology and standards institutes and services. BOX 5: KOREA Electronics Technology Project Project Approve: 1979; Project Completed: 1986, Total amount: US$29 million The project supported setting up and development of Korean Institute of Electronics Technology (KIET). The project was to support KIET as a central facility in semiconductor industry, including explore and develop export opportunities for Korean electronics sector overseas. The project played a catalytic role in building electronics sector in Korea. However, the project did not meet some of the objectives including profitability targets and industry related R&D programs due to the situation in the country when the industry itself started to invest heavily into semiconductors research leaving less room for KIET, and other economic and business conditions in Korea. Technology Development Projects (First, Second, and Third) Projects approved: 1982, 1984, 1988. Projects completed: 1986, 1989, 1992. Total loan amount: US$129 million The Technology Development Projects were a series of projects designed to foster the technological develop- ment of industry in the Republic of Korea through the financing of the Korea Technology Development Corpo- ration (KTDC) and the strengthening of three key institutions: KIST, one of Korea's leading multidisciplinary research institutes; KSBC, the Korea Basic Science Center Support to KIST was intended to cover a broad spec- trum of applied research activities and to recruit high-quality researchers; KBSC was established to provide more opportunities for joint basic science research, the foundation of technological innovation; and the role of NITI was to support SMEs by raising product quality. KTDC helped create linkages between the R&D institutes and industry, supported SMEs through the financing of technology start-ups and technological support, and formu- lated technology policy and appraised national joint R&D projects between SMEs and industry. Technology Advancement Projects (First, Second, and Third) Projects approved: 1989, 1990, 1991. Projects completed: 1993, 1994, 1994. Total loan amount: US$108 million The Technology Advancement projects were a series of projects aimed at providing funds for the purchase of modern equipment for the five main national RDIs. The broad objective of this initiative was to strengthen indus- trial R&D and basic research capacity and to increase the use of industrial standards in order to raise product quality. These objectives were in conformity with government policy, which sought to expand and strengthen vocational, technical, and tertiary education in science and engineering and to support public and private R&D activities as Korea sought to join the ranks of the industrialized countries. The availability of the new equipment and facilities made it possible for the RDIs to increase their R&D activities and joint projects, expand their testing for quality improvements, and increase their output of technical and scientific publications. Program for Science and Technical Education Project, Universities Science and Technology Research Project, Science Education and Libraries Computerization Project Projects approved: 1984, 1990, 1992. Projects completed: 1989, 1995, 1997. Total loan amount: US$195 million The Program for Science and Technical Education aimed to raise the quality of S&T education to the level required by an industrial system that sought to be more skill- and knowledge-intensive and that was moving toward the use of more advanced technologies. The Universities Science and Technology Research Project aimed to help selected universities strengthen their ability to undertake research in science and technology and strengthen their science teacher education, with the goal of raising the quality of science education in secondary schools. The Science Education and Libraries Computerization Project aimed to help improve the quality of basic science education and to provide a more effective flow of information between those university libraries that service teaching and research. 18 WORLD BANK WORKING PAPER Intellectual Property Rights Regimes. The prevailing intellectual property rights regime is an impor- tant determinant of the amount and quality of technology transfer from industrialized to developing countries as well as development of new ideas in the domestic markets. International evidence sug- gests that the ease with which foreign companies sell technology to developing countries, the terms on which it is sold (licensed), and the vintage that is sold is affected by the owner's ability to main- tain proprietary ownership. As a country moves from importing technology to finding ways of adapting and modifying that technology to serve local demand or technical conditions, the absence of a regime to protect such new ideas additionally can discourage the local developer from investing in its ideas. Knowledge-based societies pay special attention to these issues (for example, the United States is rated as number one in the world by number of patents filed, Japan second, and Taiwan third), while in many developing countries there is a clear failure to understand the importance of these services. The lack of attorneys, patent agents, and judges able to handle infringement cases can mean that the enforcement mechanism for IPR is incapable of playing its role in supporting innova- tion and technology transfer. Once other components of innovation systems take hold (such as RDIs reorienting toward applied research, spin-off companies starting to appear in larger quantities, technology financing tak- ing off, and synergies building up between the research community and industry) the question of appropriate support of their IPR becomes even more urgent. Most of these activities inevitably will trigger patenting and licensing disputes if the framework is not functioning properly. (See Box 6.) Many Bank projects have included intellectual property rights protection in one form or another, from the setting up or upgrading of national-level Patent Offices to the establishment of individual IPR units in universities or R&D Institutions to support the needs of research communities at the micro level. The Turkey Industrial Technology Project, for example, supports modernization of the Turkish IPR regime to align it with the World Trade Organization and European Customs Union requirements. The program stipulates giving assistance to the Turkish Patent Institute in its efforts to upgrade its organizational and operational systems and its physical infrastructure and staff skills, in order to improve the quality and speed of its IPR-related services (such as the issuing of patents, licensing, enforcement, and dissemination of information) and thereby to serve the needs of the industry and research community. The project also supports a promotion campaign, and the training of IPR lawyers, judges, and industry personnel. The ultimate objectives of the intervention in this area are to promote awareness of the IPR regime across the industry and among researchers, to encourage its use by making it more client-oriented and efficient, and ultimately to establish it as a necessary step in the commercialization process. The Mexico Science and Technology Infrastructure Project supported the creation of the Mexican Institute of Industrial Property, significantly reducing delays in the award of patents, increasing enforcement activities, and increasing the number and fre- quency of inspections related to IPR violations. Research and Development Institutions. The R&D sector in many developing countries typically com- prises a large number of public institutions and universities, in some cases, such as in Russia and Croatia, with an excellent academic base. These institutions tend to be inward-focused, pursuing activities largely disconnected from the needs of industry and the economy at large, and therefore are incapable of serving as effective agents of technology transfer to the private sector. Normally the largest RDIs are and would remain mostly public given their importance for the economy at large and spill-over effects make this public investment into them justified. Returns on the R&D restruc- turing for the country could be as high as 50 to 100 percent. In Taiwan, for example, the Govern- ment set up a public R&D Institute which has resulted in spinning off of two major foundries dealing with semiconductor equipment which in its turn produced linkages with 20,000 small and medium enterprises in the country. In the United States, such examples include National Aeronautics and Space Administration and National Institutes of Health that are publicly funded and provide very strong spill-over effects to the economy. Other examples include India and Korea. Most S&T projects consequently aim to strengthen and restructure public Research and Devel- opment Institutions to serve the economy, to undertake more applied research, and to promote the INNOVATION SYSTEMS 19 BOX 6: TURKEY Technology Development Project Project approved: May 1992. Project completed: June 1998. Loan amount: US$100 million This project had three broad objectives: (a) to develop the MSTQ system; (b) to encourage market-oriented R&D in the private sector; and (c) to foster the growth of a VC industry. The project supported the establish- ment of an independent National Metrology Institute (UME), separating it from the Marmara Research Center. By the end of the project UME was able to meet 30­40 percent of the needs of Turkish industry. The project supported modernization of the Turkish Standards Institute and improvement of the standardization processes; it also initiated an R&D financing culture in Turkey by setting up the Technology Development Foundation of Turkey, TTGV, a private sector-managed NGO, and by funding the country's first technology financing program (103 R&D projects financed). However, a VC industry did not materialize due to a range of reasons, including the absence of necessary incentives for the private sector and a lack of support from the International Finance Corporation (IFC), which initially had been nominated as the main catalyst for this effort. The VC component was picked up by the follow-up project. Industrial Technology Project Project approved: June 1999. Planned completion: December 2004. Loan amount: US$155 million The main project objectives are to: (a) assist in the harmonization of Turkish technology infrastructure with ECU standards, and (b) assist firms in upgrading their technological capabilities to improve the competitiveness of Turkish industry. To achieve these objectives, the project concentrated on four main areas: (a) strengthening of IPR services; (b) strengthening of metrology services to serve a larger section of Turkish industry; (c) restruc- turing of RDIs to make them more industry-oriented; and (d) supporting technology upgrading by firms (including the formation of a VC industry and the establishment of technoparks). The project follows up on the First Technology Development Project by continuing support to (i) UME, that is developing into a world-class metrology institution capable of meeting 95 percent of Turkish industry's metrol- ogy needs, and (ii) the Technology Development Foundation of Turkey that is developing into a diverse tech- nology financing institution that has changed the entire technology financing culture in Turkey. In addition, the Project supports (i) restructuring the public R&D system in Turkey through reconfiguration of Marmara Research Center (MAM, a group of eight leading RDIs), and (ii) upgrading Turkish Intellectual Property Rights (IPR) regime through strengthening Turkish Patent Institute (TPE). As a result of the project investments, by end- 2003: (i) UME is capable to meet 80% of the industry's metrology needs and provides about 500 services to the industry; (i) TTGV, in addition to its original technology financing mandate (it has financed some 200 projects to date), has become a catalyst in supporting VC funds (two VCCs were set up with TTGV's equity participation) and also supports two technoparks, in addition, its competitive Technology Support Services (TSS) grant scheme for advisory services has benefited about 600 SMEs; most of TTGV's projects have resulted in the commercial- ization of R&D outputs; (iii) MAM has increased its contractual research base and industry outreach, and was about 49 percent self-sufficient in 2003, targeting 65­70 percent self-sufficiency by 2006; and (iv) the IPR regime is improving its alignment with ECU and WTO requirements and TPE is developing into an international-level institution. Knowledge and Innovation Project Under preparation (2005). Loan amount: US$100 million This project is expected to focus on a broad KE agenda, building on the two previous projects and the recently completed Knowledge Economy Assessment Study (KEAS). This Study discussed Turkey in the framework of the 4 pillars of the Knowledge Economy and provides key reforms and recommendations in each pillar. Building on these recommendations a new project is under preparation which will focus on the larger KE agenda and build on the successful experience and institutions of the previous two Technology Projects in Turkey. The main components in this project will include: (i) Support to Enterprise Innovation; (ii) Information Society Develop- ment; and (iii) Developing Skills for the Knowledge Economy through training to enterprises. 20 WORLD BANK WORKING PAPER commercialization of their research outputs. The reorientation of S&T to meet industry needs should improve the competitiveness of industry at home and overseas, enhancing the efficiency and quality of research, increasing the synergy between the R&D community and industry, and reducing the burden on public budgets. The objective of such effort is ultimately to make a shift in thinking so that Research and Development transforms into Research for Development, where "R" becomes socially meaningful when it leads to "D" and when output is inducted into socioeconomic system. The support given by Bank programs to RDIs includes assistance in the upgrading of physical infra- structure, in the improvement of management information systems and cost accounting systems, and in the modernizing of human resource management and business processes. For greater sustain- ability, aid also should focus on improving the framework and providing appropriate incentives for cooperation between the research community and industry, by enhancing the incentives for applied research, improving the marketing and commercialization functions of RDIs, introducing competi- tive research programs, promoting joint projects with industry and other R&D organizations, and introducing a strategic approach to the commercialization of R&D outputs. Because this restructuring is dynamic in nature and strongly depends on the market and on macro conditions, the strategic approach works best, with R&D Institutions making the difficult and initial decisions first, taking the steps based on the strategy, and where necessary revisiting or BOX 7: CHINA Rural Industrial Technology (Spark) Project Project completed: December 1997. Loan amount: US$114 million The Ministry of Science and Technology's pilot Spark program became nationwide in 1986. The overall objective of the program was to help transfer technological and managerial knowledge from the more advanced sectors of the economy to rural enterprises to support growth and development in the nonstate rural enterprise sector, mostly town and village enterprises, and to help increase output and employment. This project was the first Bank Group-supported operation in China specifically oriented to the rural nonstate industry. The term "Spark" referenced the phrase "one small spark can start a prairie fire," reflecting the anticipated catalytic effect of the program on rural enterprise development. Technology Development Project Project approved: 1995. Loan amount: US$200 million The objective of this project is to support government reforms in technology policy and institutions, with the aim of promoting the development of clean, productivity-enhancing technologies in China's industries. The project is designed to accelerate the diffusion and adaptation of technologies in China and abroad through the deepening of technology markets and through institutional initiatives. The project consists of two components. The first com- ponent is designed to assist in transforming part of the R&D establishment into market-responsive technology development corporations. This component will hive off the most dynamic technology development and service- oriented elements of existing research institutions to create, through a competitive selection process, market- oriented Engineering Research Centers. The second component comprises complementary investments aimed at improving public technology services, including the modernization of the National Institute of Metrology and a technical assistance program for a productivity center. "China and the Knowledge Economy" Report--year 2000 At the request of the Chinese Government, the World Bank Institute conducted a Knowledge Economy Assess- ment in China, in 2000 publishing "China's Development Strategy: the Knowledge and Innovation Perspective, the World Bank, Washington D.C., 2000 (This report was used by the government as an input into the development of China's 10th Five-Year Plan.) This assessment concluded that China's strategy should be to build a foundation for a knowledge-based economy by (a) updating the economic and institutional regime; (b) upgrading education and learning; (c) building the information infrastructure and raising the technological level of the economy through the active diffusion of new technologies; (d) improving the R&D system; and (e) exploiting global knowledge. INNOVATION SYSTEMS 21 revising the steps as the project progresses. This approach was successfully used in Turkey's Indus- trial Technology, in which the Marmara Research Center (MAM) and other project agencies pre- pared medium-term business plans, with a three-year horizon, updating and refining those plans each year as changing conditions required. MAM, the largest RDI in Turkey, comprising eight indi- vidual R&D institutes, through support from the World Bank's Industrial Technology Project has restructured itself by modernizing its business processes, downsizing/closing down low-demand areas, transferring one of the institutes to the private sector, reorienting its outputs towards market needs, expanding in areas with the strong prospects, and reducing overhead costs. The center also established a Technopark to promote commercialization of research outputs and to increase cooper- ation with the private sector. This restructuring has resulted in a significant shift to serve the indus- try needs in Turkey and also collaborate in the European market. In 2003, MAM covered about 49 percent of its expenses through contractual research (self-sufficiency ratio is 57 percent taking into account interest earned on these funds), and aims to reach 70 percent self-sufficiency by 2006. An earlier Bank project in Mexico linked the investment made in selected R&D institutes with their partial privatization--a unique approach in restructuring that met with mixed results. The India Industrial Technology Project also supported the restructuring of the largest network of public industrial research and development institutes (38 R&D Laboratories) of the Council for Scientific and Industrial Research (CSIR). As a result of the restructuring, CSIR has more than dou- bled its share of contractual research to industry (albeit from a low starting level). The CSIR labora- tories have undergone a major cultural change, moving to proactive management in public R&D applied research and earning money from industry, foreign clients (CSIR has over 40 agreements with foreign countries, including UK, USA, France, Russia), and international patents (in 2002 CSIR filed 580 patent applications abroad and held 340 active patents abroad). Building up on the project accomplishments, India was able to attract large research contracts from outside of the country (for example, the largest General Electric R&D center outside of the United States is located in India and employs about 1,600 people). Increase in applied research in India also gave boost to the biotechnol- ogy revolution resulting in India now holding a prominent place worldwide (the United States hold- ing the first) in the biotechnology area. In the information technologies (IT) area, initially there was no attempt by the Government or the World Bank to promote the regional development of IT in India. Rather, the combination of promotion of excellent higher level education (plus a high level of investment R&D in defense and space) in certain areas as well as the willingness of the government to permit liberalized captive satellite communications by companies exporting IT services and products led to this revolution. Later on financing played a role. This illustrates the importance of govern- ments to be reform minded and find ways to encourage nascent developments be they foreign invest- ment or by local techno-entrepreneurs. Upgrading enterprise-level innovation capabilities. As seen from Figure 2, in developed countries the bulk of R&D activities are undertaken by business enterprises (OECD 2003). Having established the infrastructure to develop new ideas, it is therefore important that a working framework, capable of supporting the establishment and development of knowledge-based companies, be built to take these ideas further. (Some of these companies will be spin-offs from RDIs or joint projects with the indus- try while others will emerge through the efforts of entrepreneurial individuals.) The framework should encourage adoption of the new ideas and technologies by industry. Most SMEs are techno- logically behind the leading edge and need help in acquiring even existing technologies and in adapt- ing existing processes and materials to suit local requirements. To integrate the support available to these companies a country needs to develop functions that can effectively: (a) institutions, starting technology financing programs, or setting up a VC industry); (b) set up and launch knowledge-based companies (through setting up and upgrading the services of incubators and technology and R&D centers); and (c) help existing companies upgrade their capabilities and the quality of their services and products through the acquisition of new technologies (for example, through matching grants schemes and, again, by upgrading technology and R&D centers). The creation of a sound business environment conducive to growth, an increased technological base, and the encouragement of the 22 WORLD BANK WORKING PAPER FIGURE 2: R & D EXPENDITURES BY SOURCE OF FINANCING Percentage share in national total, 2001 Business enterprises Government Not available Other (other national sources + abroad) Japan Korea Sweden Finland Switzerland (2000) United States Belgium (1999) Ireland (2000) Germany OECD Denmark (1999) EU (2000) Slovak Republic France (2000) Czech Republic Norway Netherlands (2000) Spain United Kingdom Iceland Australia (2000) Italy (1996) Turkey (2000) Canada Austria Hungary New Zealand (1999) Portugal Poland Greece (1999) Mexico (1999) 100 80 60 40 20 0 % Source: OECD, Science, Technology and Industry Scorecard 2003. Copyright OECD 2003. http://www1.oecd.org/publications/e-book/92-2003-04-1-7294/pdf/A3.pdf practical application of technical skills can help companies compete more effectively and can thereby facilitate their economic integration with global markets. The sections below examine in more detail the provision of firm-level assistance. Financing R&D Development and its Use by Industry Given the importance of technology development for the economy and its complexity, many coun- tries have set up specialized institutions focusing on technology development financing. As practice shows, governments seldom are equipped to undertake this function and the private sector typically is less than enthusiastic about venturing into it, especially during the early stages of development when the risks involved are high. These technology financing institutions typically are public or public­private partnerships or publicly funded not-for-profit organizations. In addition to their regular business of providing technology financing for individual projects, they also in many cases serve as catalysts for development in new areas, such as venture capital funds, and start-up funds, and INNOVATION SYSTEMS 23 BOX 8: CHILE Millennium Science Initiative Project dates: 1999­2002. Loan amount: US$5 million This project consisted of three components, aimed at creating: (a) a management structure for Millennium Science Initiative; (b) a competitive fund for scientific excellence; and (c) a network for the promotion of scien- tific excellence. Science for the Knowledge Economy (Phase I) Project planned: 2003­2007. Loan amount: US$25 million Given the long-term commitment that is necessary to consolidate institutional and behavioral changes in the S&T sector, a program approach is proposed for Chile that would use the Adaptable Program Lending (APL) instru- ment. The program comprises two phases. The first phase, Science for the Knowledge Economy, extends until 2007 and supports the establishment of a strong policy framework. It also will provide for the continuation of the Millennium Science Initiative and a further strengthening of the science base. The second phase (2007­2010) will continue the activities to strengthen Chile's science base, with a view particularly to enhancing private sector R&D. A further phase aimed at improving the innovation system is planned for fiscal 2006. technoparks. The financing provided through such institutions, given its developmental connotation, is typically low-interest, and in some cases is provided in the form of matching grants. The financial instruments employed by technology financing institutions include loans (zero-interest, low-interest, commercial, and conditional), grants (usually competitive matching grants), equity participation (sometimes through venture capital programs), royalties, and guarantees. These matching grant schemes have met with success in several countries including the SPREAD program supported by the India Technology Development Project. This program provided assistance to SMEs to collaborate with Technology Institutions. One start-up, a biotech firm, received SPREAD assistance in 1995, to develop the hepatitis B vaccine in cooperation with the Council for Science and Industrial Research. The company developed the vaccine and began commercial production two years later, resulting in a sharp price decrease for the vaccine. This led to a saving in foreign exchange for a country that had to import the vaccine in large amounts and now has its own production capacity. Examples of tech- nology financing institutions and programs in the industrialized countries include Finland's TEKES, VINNOVA of Sweden, and the Vienna Science and Technology Fund of Austria. In Turkey, the Bank supported the establishment of the Technology Development Foundation of Turkey (TTGV) as part of the first Technology Development Project. The TTGV initially focused solely on technology development financing to private enterprises developing R&D products, but with the follow-up efforts of the Industrial Technology Project has benefited some 200 companies and is now also involved in two venture capital funds, two technoparks, two innovations centers, and in a start-up fund (to focus on start-up firms and their initial projects). TTGV has also been successful with its matching grants scheme for technical assistance, and has supported more than 600 SMEs in carry- ing out activities to improve quality and their technology base. Firm-level technology financing ranges from the provision of seed money for prototype develop- ment and the exploration of new business ideas to the support of the commercialization of research outputs. In Turkey, all of these activities were supported under the technology development financing program, but they may also be split into separate programs, as happened in Croatia, which supports prototype development under the TEST Program and prototype commercialization under the RAZUM Program. Experience in implementing these programs worldwide demonstrates the impor- tance of ensuring that from the start they have appropriate guidelines, transparent review procedures, and intellectual property rights-related procedures, and that they make available diverse financial instruments depending upon market requirements. Another aspect of technology financing, the importation of ideas, was supported in the India Industrial Technology Project, in which one component enabled a wide range of technologies in 24 WORLD BANK WORKING PAPER BOX 9: MEXICO Industrial Technology Development Project Project approved: July 1986. Project completed: June 1993. Loan amount: US$48 million The project was designed to improve the capability of industry (especially private firms) to undertake the tech- nological innovation needed to contend with the increasing competition that was expected due to the govern- ment's economic liberalization program. This project may have been premature, coming as it did in the early stages of what has been a profound transformation of Mexico's economy: conditions were not yet suited for private sector R&D and Mexico was going through one of its worst economic crises. The project nonetheless can be credited for having been a catalyst in the policy dialogue on project and a factor in the ensuing changes in institutions and operational environment that are now providing a much more fertile ground for technological innovation. Studies financed under the project enabled the government to improve its project policy and infra- structure; the metrology studies additionally produced a number of significant findings on which the follow-up project was able to build. Science and Technology Infrastructure Project Project approved: May 1992. Project completed: June 1998. Loan amount: US$189 million The main objectives of this project were to rationalize public sector funding for S&T and to develop technology institutions by supporting the restructuring of a science research program and improving the efficiency of public support. The project was successful in increasing the number of Mexican scientific research publications and their impact, significantly increasing the production of research-trained personnel, renewing the Mexican research instrumentation infrastructure, institutionalizing a merit-based peer review, and improving the efficiency of the National Science and Technology Council. The project supported the creation of the Mexican National Center for Metrology (CENAM), which now has 104 laboratories operational and which has helped to attract foreign investment and promote competitiveness in Mexican industry, and supported the creation of the Mexican Insti- tute of Industrial Property, significantly reducing delays in the award of patents, increasing enforcement activities, and increasing inspections relating to IPR violations. The project was also successful in creating a supply of basic S&T infrastructure and in helping to sustain development of an R&D capacity. Knowledge Innovation Project Project approved: June 1998. Project completion expected June 2003. Loan amount: US$300 million The Knowledge and Innovation Project, approved in 1998 to support a third generation of reforms and to address some of the gaps remaining on completion of the S&T Infrastructure Project. Specifically, it was designed to enhance the effectiveness of research support programs while increasing linkages to user groups in society and industry. The project's development objectives were: (a) to support S&T research by stimulating work in new and lagging fields, specifically by promoting quality in research, by consolidating and improving peer review, and by prioritizing the integration of young researchers into the system; and by overseeing the institutional strengthening of the scientific management research conducted by National Council of Science and Technology (CONACYT); (b) to support joint action between universities/public research institutes and the private sector, by restructuring public S&T institutes to increase cost recovery and reorientation to industry and by matching grants for joint industry-academia projects; and (c) to support the productivity and competitiveness of firms, particularly SMEs, through a technology modernization program to support upgrading with matching grants and through the development of private regional/sectoral institutional technology support centers. diverse sectors to be imported by firms of all sizes. The project came in at a time when foreign exchange limitations in the country were severe and the rules for the import of technology highly bureaucratic. By supporting this component, the project was not only able to upgrade the technolog- ical capacity of firms but was able also to bolster the speed of liberalization. The Mexico and Republic of Korea projects focused on financing to improve the absorption of foreign technology and the commercialization of local technologies. Korean firms, through a series of technology advancement and technology development projects, imported technology in the form of equipment and licenses and depended little on foreign direct investment. The expectation was that firms should become INNOVATION SYSTEMS 25 export-oriented soon after entering production, creating a pressure that, combined with policies to encourage industry to enter complex technological areas, encouraged firms to improve their R&D capacity to sustain global competitiveness. Venture capital. Venture capital plays an important role in the promotion of innovation and launch of knowledge-based companies (OECD 2003, see Figure 3). Traditional financial institutions con- sider R&D activities a high-risk investment, as most new entrepreneurs lack track record and the conventional collateral and equity resources. There is a need therefore for non-traditional financial instruments that are not based on conventional commercial terms and collateral requirements, to support innovative ideas. Venture capitalists can fill this gap and more, as they typically do not just provide funding but also know-how, advice, and "hand-holding" services. This specialized form of financial service is based on a deep knowledge of the innovations sector, and can be very rewarding for the investor. However, in many countries Venture Capital Funds (VCFs) have proven risk- averse, focusing on the expansion of businesses in general rather than on R&D-driven new ideas. The Bank has been instrumental in many cases in creating or realigning a VC industry to support also grassroots activities. This venture capital culture needs to be promoted to attract the right kind of investors and the skills needed to run risky, but rewarding, operations. FIGURE 3: INVESTMENT IN VENTURE CAPITAL, 1998­2001 As a percentage of GDP Early stages Expansion United States Iceland OECD Canada Netherlands United Kingdom Sweden Korea Belgium Finland EU Germany Norway France Ireland Spain Australia Switzerland Poland Denmark Italy Czech Republic New Zealand Portugal Greece Hungary Austria Japan Slovak Republic 0.5 0.4 0.3 0.2 0.1 0 % Source: OECD, Science, Technology and Industry Scorecard 2003. Copyright OECD 2003. http://www1.oecd.org/publications/e-book/92-2003-04-1-7294/pdf/A7.pdf 26 WORLD BANK WORKING PAPER There is some debate in the system about the utility of VCFs and their impact on the develop- ment of a sound market for technological ideas. There also is a concern that government participa- tion in what is primarily a private-sector endeavor may not be welcome, raising as it does the fear of political interference in business decisions. Research indicates, however, that a properly set-up venture capital industry, supported with public funds, can make a useful contribution to the development of technology financing and the creation of knowledge-based companies. In Israel, Government's sup- port of new R&D projects through venture capital (YOZMA Programs3) combined with the immi- gration of skilled and knowledgeable workers from Russia produced an exceptionally good effect for the economy. Since inception in 1993, YOZMA managed more than $170 million and has made direct investments in more than 40 portfolio companies as well as helping a significant number of its portfolio companies go public on major stock exchanges in the US and Europe. The YOZMA funds were instrumental in positioning the portfolio companies for acquisition or an investment by leading corporations such as Agilent, America On Line, Cisco, Computer Associates, ECI Telecom, Enron, General Instruments, Johnson & Johnson, Medtronic, Microsoft, Sequoia Capital and Terayon. In collaboration with capital markets boards, the Bank has used awareness-raising and demand- assessment seminars to facilitate the formation of venture capital funds. The approach used has been to encourage minority equity participation in the high-tech sector, through funds that are then managed and operated by the private sector. This practice has proved successful in India, Turkey, and Israel, among others. In India, the Industrial Technology Project supported six Venture Capital Companies (VCCs) involving nine funds. These VCCs have invested in more than 300 companies, producing average returns of 18­20 percent--a performance that is considerably better than that of most venture capital activities in infancy. The project in essence launched the venture capital industry in India by building upon the existence of one entity and encouraging the framing of appropriate policies and incentives. Its contribution, in terms of influencing the culture of risk finance and enabling foreign venture capitalists to be attracted to India, was equally if not more important than its dollar contribution. In Turkey, the Industrial Technology Project similarly has supported two venture capital funds jointly with Turkish and international investors, including the International Finance Corporation and European Investors. Technical assistance grants for productivity and quality enhancement. To offset the learning costs of firms during the initial acquisition of technology services, and to promote technology diffusion through strong demonstration effects, countries establish specialized facilities to provide matching grants to individual firms for technical assistance to enhance productivity and quality. Through these programs firms receive technical assistance and training to improve their technical processes, market- ing, and financial management, to acquire clean technologies, to diversify production, and so forth. Indirectly, these programs also support the development of a domestic consulting market for tech- nology and business services. One successful example is the Turkey Technology Support Services (TSS) Program, and a Productivity and Quality Facility (PQF) is also being set up in Croatia. The PQF, similarly to the TSS, will focus on providing rapid support to firms in relatively simple activities related to productivity and quality enhancement. Other examples of matching grant schemes include Indonesia's Industrial Technology Development Project and Mexico's Knowledge and Innovation Project. Technoparks, science parks, and technology and R&D centers. The primary contribution of support entities such as technoparks is in helping the development of the local R&D industry and improving the linkages between the research and industry communities. These entities normally are built as a 3Yozma has earned worldwide recognition as the creator of the Israeli venture capital industry to support R&D and its commercialization. Yozma makes equity investments in technology companies engaged in fields where Israel has demonstrated world leadership. The Group targets high-growth companies in the sectors of communications, information technologies and life sciences. INNOVATION SYSTEMS 27 result of local initiatives to support firm-level innovation and technology development and to improve the use, adaptation, development, and commercialization of new technologies. In addition to the obvious benefits of profit generation for the entity housing a technopark and of the support they give to local business development, many see these initiatives as important means by which research and development institutions and universities can commercialize their own ideas. Technoparks focus on technology-intensive development, generally with a university or research institution as a key part of their establishment and operation. The university or research institution can contribute faculty members, students, libraries, laboratories, technological infrastructure to the overall operation; the technopark itself typically is characterized by the presence of large, mature tenants that can make the substantial commitment required to take advantage of the academic or research potential of the nearby institution. Technopark investments are typically considered to be of a high-risk and high-reward nature, and thus typically are piloted in a phased manner on the basis of well-defined business plans and entry and exit criteria for the tenant firms. The Turkey Industrial Technology Project is supporting three technoparks and two innovation centers; other successful parks can be found in Israel and throughout Europe, in the United Kingdom, Finland, Spain, Taiwan, and Ireland, for example. Science parks are similar establishments, but are usually smaller and focus more on incubator-type activities. Otherwise they share many of the characteristics of a technopark, commonly being based on an RDI or university and building on the potential of the linkages between the research staff and tenant firms. Technology centers and incubators provide a complementary service, usually in the form of advisory services for SMEs seeking to develop new technologies. These centers also provide infrastructural support to firms, and are an effective tool in addressing the local and regional needs of industry and in assisting local start-up companies. One example, Armenia's Enterprise Incubator Project, initiated in 2002, aims to create business services centers to promote the Armenian IT industry to potential investors and business partners. It has thus far had limited success, however, as the project design is complex and the implementing institutions are still building capacity, and as a result have had difficulty meeting the requirements needed for broader Armenian reforms. Education and Lifelong Learning As mentioned earlier, Bank experience in building the four pillars of the knowledge economy has been most substantial in the areas of innovation systems and policy framework. It is important for context however, to provide at least a brief discussion of the other two areas: education and training, and the information infrastructure. Equipping people to deal with the demands of knowledge-based economic growth requires a new model of education and training, with an emphasis on lifelong learning. A lifelong learning framework encompasses learning throughout the lifecycle, from early childhood through retirement. It encompasses formal learning (provided by schools, training institutions, and universities), non- formal learning (such as structured, on-the-job training), and informal learning (skills learned from family members or people in the community). It allows people to access learning opportunities, as they need them rather than because they have reached a certain age. Lifelong learning is crucial for preparing workers to compete in the global economy, but it is important for other reasons as well: by improving people's ability to function as members of their economy, for example, it increases social cohesion and improves income distribution. Developing countries and countries in transition risk being further marginalized in a competitive global knowledge economy if their education and train- ing systems fail to equip learners with the skills they need (World Bank 2003). In response to this problem, in recent decades the Bank has launched several projects designed to equip a country's labor force to adapt to the changing needs of the global market. General reforms in this sector have included the modernization of teaching curricula and of the testing and examination process, with the aims of helping industry meet international standards, assisting in the creation of qualification assurance systems to certify the competencies of individuals and accredit firms and institutions, and meeting the training needs of industry. Critically, the 28 WORLD BANK WORKING PAPER reforms have sought to establish new mechanisms by which to finance education and to improve access to learning services. Formal learning. The Bank has been engaged in a number of projects in the primary and secondary education areas to improve science and math skills, to modernize curricula to international standards, and to introduce more ICT components into basic education. Of these, this paper focuses on those projects targeted at higher education, specifically at the university and graduate level. There have been significant investments in this area by many countries. Projects in science and technology, even those launched prior to the last decade, have made significant investments in upgrading science, engi- neering, and technical skills. This is partially due to the emphasis that countries have made on the input parameters of the innovation system, which has guided the effort to upgrade the number and capabilities of scientists and researchers. Examples of such projects have included the Science and Technical Education project in the Republic of Korea, designed to improve the quality of science and technical education and research; the Science Education and Libraries Computerization Project, in the same country, to improve the quality of basic science education and to provide a more effective flow of information between the university libraries that service teaching and research; the Philippines Engineering and Science Education Project, aimed at upgrading the country's industrial and techno- logical capability by increasing the supply of high-level S&T manpower; Tunisia's Higher Education Restructuring Project, designed to make the higher education system more responsive to the coun- try's needs and to improve its performance in economic terms (cost effectiveness) and human terms (the proportion of university entrants who successfully graduate); the India Technical Engineering Quality Improvement Project; and Indonesia's University Research for Graduate Education Project, which aimed to improve the quality of graduate education. Nonformal learning. The supply-driven model of education emphasizes the production of scientists and researchers, but the increasingly predominant demand-driven model uses industry needs to determine the skills needed in the workplace. According to this model, nonformal, industry-specific training and skill upgrading are a priority. Firms provide this education for their employees at various levels and through diverse programs, and formalizing the private sector participation in this process has become an important item on the education reform agenda. Support programs increasingly are seeking to integrate the education sector into the broader economic growth strategy in an approach that is quite different from the traditional focus of education reform, which has tended to be on edu- cation subsectors (higher education, basic education, continuing education, and so on). By structur- ing the education components of KE programs in this way, the program designers can keep sight of the demand-side requirements of education--that is, the requirements of the economy and of the labor market. Examples include the Indonesia Second Professional Human Resource Development Project, which aimed to upgrade the quality of professional, managerial, and S&T staff in key govern- ment ministries and agencies, both at local and national levels and, on a limited scale, in the private sector; the Malaysia Polytechnic Development Project, designed to improve the efficiency and capac- ity of technical education by establishing training practices that are market-oriented and as such seek to reduce structural unemployment and encourage greater labor absorption and mobility; and the Mauritus Higher and Technical Education Project, aimed to produce personnel trained to support a more competitive economy. Informal learning. A third area of focus in lifelong learning is that of informal learning, by which workers learn through their communities and family. This is an area in which little work has been done, but the Bank has begun to emphasize this as an additional component when modernizing education systems in developing countries. Financing of education. The move toward a lifelong learning system can be an expensive one for developing countries. While most education spending is based on local costs, many essential inputs of INNOVATION SYSTEMS 29 lifelong learning, such as computers, laboratories, and Internet access, are priced on an international scale. Most of the money that funds education in developing economies comes from public funds, and these funds typically are inadequate to extend education opportunities to everyone. There are several financing instruments that have been used to increase private-sector participation in this arena, however. For example, Mexico's Higher Education Financing Project, which aims to assist academi- cally qualified but economically disadvantaged students to pursue advanced studies, operates a pri- vate sector student loan program. Elsewhere, Indonesia's Higher Education Support Project and Romania's Reform of Higher Education and Research Project, completed in 2002, are examples of competitive research programs. Information Infrastructure (ICT/e-Development) Information and Communications Technology (ICT). A well-functioning communications infrastruc- ture is the backbone of a knowledge-based economy. Privatization and liberalization are essential for the development of an affordable and modern telecommunications infrastructure. The key areas of focus are: (a) improving universal access to telecom services; (b) promoting affordable Internet access; (c) improving telecom infrastructure in rural areas; and (d) promoting alternative means of communication, such as wireless services. Modern information communications has the potential of eliminating the disadvantages of peripheral location, and as such is an equalizer of opportunities: Internet and mobile communications can help a company anywhere to establish a global presence and communicate on the global scale. BOX 10: IPR CASE STUDY--INDIA NATIONAL CHEMICAL LABORATORY (NCL) The India Industrial Technology Project began the process of transformation of the Council of Scientific and Industrial Research (CSIR) after nearly a half-century of inertia. CSIR is India's largest R&D network with 40 research laboratories and over 25,000 staff. The project initiated the revamping of this institution through dramatic modernization of business and HR processes, performance and outputs, and a reorientation towards industry through enhanced customer orientation and market responsiveness. This was re-emphasized in their vision and strategy whereby they envisaged: re-engineering of the organizational structure to enable CSIR to become more customer oriented; linking the R&D programs and activities to the industry through alliances, networking and partnerships; stimulating the intellectual property management in CSIR; investing in select high quality science that would be the precursor for high-technology; and refurbishing human and physical capital. One example of the momentum achieved by this institution is the specific case of one of its laboratories, NCL. The Bank supported technology project for India had a component of a grant to NCL. Among other things, NCL used this grant to enhance its capacity in intellectual property rights. NCL scientists were sent for training in IPR to British Technology Group in UK. These scientists brought and spread a new culture on patenting in NCL. (Note that the number of US patents granted to NCL till 1989 were zero). NCL acquired a patent on Solid State Polycondensation of Polycarbonate that was licensed to General Electric (GE), who had 40 percent of world mar- ket share of polycarbonate. This built the partnership between NCL and GE. It grew to such an extent that Jack Welch, the CEO of General Electric (GE), decided to set up the GE R&D Centre in India. This centre today employs over 1600 people (with further expansion planned to 2400). This is the second largest R&D centre of GE in the world. GE's example was followed by many leading companies. India today is emerging as a global platform for R&D, as many companies are following GE's example. Indeed, over 100 companies have set up their R&D cen- ters in India now. For CSIR's Senior Management, the catalytic effect of the Bank's technology project is clear through this simple example of NCL developing the capacity to file and win US patents which acted as in initial trigger for the NCL-GE partnership and ultimately resulted in GE's decision to set up R&D Centre in Bangalore. 30 WORLD BANK WORKING PAPER Electronic Development (e-Development) applications ease and can make more efficient the transaction process between government, private firms, and civil society. These applications can take many forms: Intragovernment interaction: Modernizing systems and processes to enhance the communi- cation and information flow within and between ministries and different governmental organizations (for example, e-Budgeting). Government-to-business interaction: Creating an environment conducive to business, to improve efficiency in public spending and improve transparency (e-Licensing, e-Procurement, e-Registration). Government-to-civil-society interaction: Expanding access to government information to reduce bureaucracy, inefficiency, and enhance transparency (e-Justice). Business-to-business applications (e-Commerce, e-Supplier, e-Vendor, e-Services) Business-to-customer applications (e-Banking, e-Payments) Major issues to be tackled within the e-Development agenda include contract enforcement, con- sumer protection, liability assignment, privacy protection, process and technical standards, security, authentication, encryption, digital signatures, and connectivity protocols. Several Bank projects have addressed e-Development issues in policy reform and the use of ICT. While some projects, like e-Sri-Lanka, take an integrated approach to e-Development by attempting to tackle most of system within one project, most others focus on a small group of related issues at a time and phase the operations based on their readiness. For example, the Venezuela Supreme Court Modernization Project, completed in 1998, supported the tremendous potential of technology- driven reform. By streamlining and automating case handling and reporting systems, the court eliminated multi-year backlogs that had hampered its efficiency and eroded public confidence in the institution.4 Turkey's recently completed Public Finance Management Project, a state-of-the-art modern budget execution system, successfully deployed the "say 2000i" system, which embodies the functionality of a financial ledger system and has the reporting capabilities and capacity to provide the Ministry of Finance with accurate and timely information on the status of budget execution. A project under preparation in Russia, the Customs Development Project, aims to reform and mod- ernize the Russian Customs administration. 4See the Venezuela Supreme Court Modernization Project website: http://www.tsj.gov.ve/ CHAPTER 4 MONITORING AND EVALUATION O ne of the main characteristics (and a cornerstone of the rationale) of technology support is the public-good nature of technology development and the upgrading that results due to the high spillovers from such efforts. It is difficult to measure these factors in traditional terms, such as net present value or financial rate of return, and it is difficult to make estimations of the benefits that might flow from the proposed investment. At the same time, however, it is imperative that the impact of investments in this area be monitored if private sector involvement is desired. The proposed approach to this dilemma has two components: (a) empirical analysis of the benefits to the economy; and (b) development of a set of project-specific performance indicators capable of measur- ing progress toward the project's objectives. The project's outcomes analysis should, in addition to project specific indicators, include a broader good for the country such as FDI inflows, international outreach and collaboration of the beneficiaries, employment generation in the country. Surveys and interviews are important tools in assessing technology projects. Empirical analysis should include benchmark analysis of the economic conditions at the begin- ning of the project and subsequent analysis (midway through the project and at the end) to check the hypothesis of improved economic conditions. The variables to be examined may include the growth of new business, exports, market share held by R&D companies, company profitability indicators, and, ultimately, such economic indicators as gross domestic product growth, growth in R&D expenditures, and foreign direct investment. Specific project indicators should be developed at three levels: (a) input indicators to keep track of the extent to which implementation meets the stated expectations and schedule; (b) output indica- tors to track the immediate results of implementation, in accordance with project plans; and (c) out- come indicators (including development impact indicators) to evaluate the extent to which the project has achieved its objective of improving technology development. Each set of indicators should be supported by specific ratios and measurable data, collected over the project lifetime. For example, input indicators could include the percentage of investments completed, and the number of new laboratories equipped or opened. Output indicators could include progress on the number of patent applications processed (for patent agencies), the average time required for application process- ing, industrial research income (public and private), industrial contracts income, the number of 31 32 WORLD BANK WORKING PAPER clients, the number of joint projects, the number of publications, the self-sufficiency ratio, and repayment ratios (in the case of technology financing). Outcome indicators could include increases in the country's R&D expenditure, the improvement in access to financing of technology companies, increases of exports by beneficiary firms, commercialization of new technologies, the reduction of barriers between industry and the research community, and the regional outreach of programs. Per- formance indicators should measure not only output indicators but also process indicators (restruc- turing of institutions, business process reengineering, reorienting to industry needs, etc.) Monitoring and evaluation (M&E) activities are best carried out systematically. Performance indicators should be updated periodically by responsible project agencies during their reporting cycles (at least semiannually), and empirical studies, including surveys and interviews, could be outsourced to private sector firms or statistics institutions. An M&E scheme along these lines was successfully introduced under the Turkey Industrial Technology Project, and is present in various forms of sophistication in several projects. CHAPTER 5 LESSONS P roject Scope and Complexity. Technology projects normally include a wide spectrum of interventions, all of which are complementary in nature and would not function well with- out each other. The composition of the project would depend on the country situation and would be unique in each case. On the supply side, the reforms can (a) tackle the restructuring of R&D Institutions to reorient them toward industry; (b) build up a functioning measurements, stan- dards, testing and quality system to improve competitiveness of products domestically and interna- tionally; and (c) provide the necessary protection to the industry in the form of a healthy intellectual property rights regime. On the demand side, the reforms can support the use and adaptation by the industry of innovations and new technologies developed by the research community. It should also be noted that the technology sector cannot function unless appropriate technology financing pro- grams, including venture capital, and start-up funds, are in place. Technology projects typically are complex, contain multiple components of a complementary character, and must be seen as long-term efforts. Experience has shown that a systemic and holistic approach to technology development works best and that such operations should not be too nar- row. Each technology project has to be "custom-designed" and must be a product of a collaborative approach among the stakeholders in the country. A series of projects or an adaptable programmatic lending approach can work well, as this allows a country to develop a long-term strategy, comple- mented by medium-term interventions. As the examples described in the boxes in this report show, Mexico, Turkey, India, Chile, and many other countries are not only applying a multisectoral approach, wherein different projects look at different sectors and improve them simultaneously, but they are also looking at multigenerational approaches, wherein the vision and strategy is determined with a long horizon and prioritized activities are undertaken in a sequenced approach to meet that vision. Lessons learnt from previous Bank projects endorse this approach by suggesting that tech- nology development be tackled in an integrated way and as part of a broader industrialization strat- egy. No single project, of course, can or should try to address all issues. The complementarity of activities and the built-in synergies in these projects imply complexity in design, and as a result these projects are labor-intensive and resource-intensive to prepare and super- vise (for both the client and the Bank). The projects require support from the public sector, to pro- 33 34 WORLD BANK WORKING PAPER mote investment in R&D. Given the difficulties of the initial reforms and delayed return for the econ- omy, the innovation support agenda sometimes is accorded low priority by the busy governments struggling with fiscal deficits and other macro-economic challenges. Therefore, technology projects require strong dedicated championship in the country to move the reforms along on both the Government and the institutional level. The role of a strong local champion is crucial for following through with the tough initial reforms as well as to ensure integrity of the project design for all Bank projects, but even more so for the innovation support ones. The Bank should not launch into exten- sive project preparation (and ultimately, implementation) without finding such a local champion. The technology projects also require intensive preparation and supervision by the Bank, and as a result the lending and supervision budgets of these projects are typically higher than average. Continuity in the skilled and dedicated Bank staff managing these projects is also critical to ensure the transfer of knowledge as well as benefit of the worldwide experience. The capacity of the Bank project teams must be increased to allow them to provide high-quality advice and coordination skills to meet the expectations of the highly sophisticated clients in the Innovations Systems area. Flexibility in project design. Given the nature of technology development activities and the newness of many of these activities in some countries, it is not always appropriate to follow a rigid implemen- tation scenario. It is therefore critical that flexibility be incorporated into the project design, to enhance its effectiveness and to reduce the bureaucracy involved in implementation and to permit adaptation of the project to changes in the institutional and economic environment. This flexibility includes the incorporation of unallocated funds for use in priority activities that demonstrate supe- rior performance, as well as pilot initiatives to determine viability and the annual review and updat- ing of business plans. Intensive monitoring to determine if continuation or modification of project elements is required and to permit a rapid response to changing needs is an integral part of the process. It may also prove beneficial for the projects to focus on the mechanisms and how they work--criteria, transparency, speed, reliability, and oversight­and improve them overtime through effective evaluation processes. A good feedback loop to adjust to changing needs should be incorpo- rated in project design to allow for appropriate and necessary adjustments. This was crucial to the success of the India Industrial Technology Project, the Indonesia Industrial Technology Project and the Turkey Industrial Technology Project. Each of these projects survived well in environments that went through major economic upheavals. However, these projects also succeeded mainly due to strong local ownership and champions, committed institutional leadership and recognition of projects long-term benefits and impact as well as appropriate response by both the Bank and the Government/Institutions in accommodating changing needs during the project lifecycle. Public-good nature and externalities. Due to the public-good nature of investment in measurements, standards, testing and quality systems and R&D infrastructure and the high spillover effects and exter- nalities associated with the generation, adaptation, and diffusion of new technologies, the involvement of the public sector in this area is justified. The private sector normally would invest in these activities only to the extent that it could internalize the benefits of these investments fully and make a profit. This is possible only for very large firms, leaving a large part of the industry needs unfulfilled and the level of private investment far below the socially optimal level. The role of the public sector therefore is crucial, in its ability to create a shared approach by providing support for the setting-up of technol- ogy services where they do not exist or the reorientation of those that do exist. Building a good institutional framework and setting up regulations conducive for technology development remain the responsibility of the public sector. Many MSTQ services, especially metrology services, remain in part publicly funded even after they are up and running, but the cost to the government will be far out- weighed by the benefits of a well-running system that accrue for the economy at large. Private sector participation. Public sector approaches in the past have led to inefficient infrastructure and services that do not respond well to industry needs. An emphasis on private sector participation INNOVATION SYSTEMS 35 therefore is important in the restructuring process, for the sector's ability to inject into the process efficiency, management capability, good governance, and cost-effective design and delivery. Cofi- nancing from the private sector and the setting up of advisory boards and councils with private sector participation, while maintaining involvement of the public sector, have in past experience proved valuable in helping maintain a business focus that benefits the economy. Also, private sector research community involvement in the project evaluation and monitoring process is important. Venture capital and technoparks initiatives should not even be considered unless there is strong support and cofinancing from the private sector. The Government's role should be restricted to providing seed funds to start and catalyze these initiatives, but they should ultimately be managed by the private sector and funded by other sources (for example, in the India case, 25­33 percent of venture capital funds were financed through the Bank loan, while the Turkey Industrial Technol- ogy Project financed 12 percent of the equity participation in individual venture capital funds, and 30 percent in the technoparks). Technology financing agencies. Some later Bank projects have financed autonomous counterpart tech- nology financing agencies to maximize the ability to achieve project goals and objectives in this area. If they are to be able effectively to take risks and attract high-caliber professionals and entrepreneurs, these intermediary agencies should be set up with independent management, professionalism, and should bring with them knowledge of different industries and the R&D sector. Specialized technol- ogy financing agencies are best equipped for lending to technology programs. The Korea, India, and Turkey experiences illustrate the advantages of working with professionally managed institutions that are responsive to market needs. Institutional reforms. Any effort to change an entrenched mindset will be slow. In this arena typically there will be strong resistance from the research community, which traditionally is focused on acade- mia and publishing. The momentum in these projects usually rises slowly in the initial stages. It is therefore important that incentives, both career and financial, and on the institutional and individual levels, be strong: public institutions should be made accountable for their performance to encourage them to strive for their specific goals, and scientists must be rewarded for initiating joint projects and conducting applied research for industry. The modern business culture and management experience typically are unfamiliar to the scientific community at large, and therefore incentive changes must be combined with training and awareness-building. As the restructuring of public institutions to meet industry needs unavoidably will lead to closures in nonperforming areas and enlargement in promising areas, fully considered and transparent staff redundancy plans need be put in place. The fair and trans- parent treatment of human resource matters can help smooth the process of reform and reduce the resistance to change; it also can help the public to understand the process and its objectives and thus build up broader support. Management Intensity. The technology-related business, and specifically projects targeting the restruc- turing of the technology sector, require high level of management and coordination effort. Such pro- jects are labor- and resource-intensive, and would ideally require the solid commitment of and tough decision-making by government and institutions before the beginning of the project, require a change in the mindset of relevant institutions, and must involve the participation of the private sector, a beast that has a mind of its own and that cannot be lured into doing something that offers no profit or gain. It would be most desirable that the government and key institutions make their tough decisions upfront. Making the key decisions early on the autonomy and governance, and setting up a functioning change management group, will in addition to increasing probability of success of the operation also help to maintain the momentum of the reform. However, in real life one needs to find a reasonable balance between the commitment, reforms and timeliness, and some tough decisions will inevitable be carried out into the implementation period. 36 WORLD BANK WORKING PAPER Time factor. It is important, finally, to have an end in sight. Typical Bank-loan four-to-five-year time horizon has proven to be effective for successful implementation. Most successful projects do not wait for a country's entire reform process to be either initiated or completed, but work within the existing agenda by phasing reforms and often catalyzing the future steps. Impediments to Avoid. As mentioned earlier, the Bank can play an important role in assisting client countries in upgrading their innovation systems, including scientific and technological capacity. However, the success level has been mixed. This review of Bank projects, in particular of the factors contributing to their success and failure, has revealed a number of impediments to successful achieve- ment of project objectives. The key impediments on the Bank side include highly complex project design combined with rigidity, inadequate resources for preparation and supervision, poor monitor- ing and evaluation processes, a lack of continuity and appropriate skills and dedication in project teams to customize project design to country context and local institutional capacity, poor resolve to follow through on institutional and policy issues. On the Client side, the key issues involve weak leadership and institutional capacity, resistance to long-term commitment to change, weak policy framework, a lack of continuity in institutions and in the project management teams, inadequate autonomy and governance structures of the project beneficiaries, a lack of effective monitoring and evaluation systems and lax focus on project impact. Therefore, it is important to ensure that these issues are effectively addressed during the design and implementation stages of these inherently complex and attention intensive but highly rewarding projects. ANNEXES ANNEX A KNOWLEDGE ECONOMY PROJECT MENU Potential Interventions in the Four Pillars of the Knowledge Economy I Policy and Institutional Framework A An appropriate policy, regulatory, and institutional environment to promote business investment and economic growth driven by innovation: Openness to trade and foreign direct investment Credit and financial sector policies to deepen financial intermediation Judicial systems to improve the rule of law and its enforcement Labor markets to be stimulated to create a supply of knowledge workers (including development of conducive labor codes, redundancy regulations, human resources regu- lations, and so forth) Development of regulations governing distance learning establishments, their accredita- tion and supervision Environment to support public research and development institutions and their staff engaging in contractual research and commercialization of R&D B Domestic competition policy to promote sustained economic growth and ease the entry and exit of firms into and out of the market: Intellectual Property Rights regime to align with World Trade Organization and Euro- pean Union standards National competitiveness policy, including antimonopoly regulations and the setting up and strengthening of antimonopoly institutions Science and higher education policy to be aligned with the needs of the economy Business environment to be conducive to private sector investment in new technologi- cal ventures (including appropriate regulations and incentives for venture capital); 39 40 WORLD BANK WORKING PAPER Tax and other incentives to improve private sector participation in R&D, including investment in R&D (adapt, use and develop R&D) and promotion of knowledge-based companies Privatization and liberalization of telecommunications and postal services C Support for technology policy, through the setting up and/or strengthening of technology policy institutions to enable them (and to finance some of their activities) to carry out ade- quate policy studies, conducting foresight studies, serve as data centers on technology issues for private and public sectors both locally and internationally, and to carry out tech- nology outreach and public awareness activities. II Innovation Systems A Upgrade intellectual property rights (IPR) regime and metrology, standards, testing, and quality (MSTQ) systems to enhance the competitiveness of the economy and increase trade by aligning the policy, legal, and institutional framework and physical infrastructure with EU and WTO standards: Strengthen IPR regime, upgrading the national patent organization's physical infra- structure; improve the quality and speed of services; train patent judges, lawyers, and industry; improve information dissemination Improve national standard and quality systems by enhancing the role of the private sec- tor in service delivery; upgrading physical and laboratory infrastructure; improving the quality and speed of services; and reducing costs Upgrade metrology services by strengthening national metrology organizations and pri- vate laboratories; upgrading metrology facilities and laboratories; improving the quality, number, and type of services; improving awareness among the industry and academic community; and promoting the systems and training users Create institutional infrastructure for quality enhancement and certifications, including national quality councils and national accreditation systems B Restructure R&D institutions to improve the efficiency and quality of research, increase the synergy between the R&D community and industry, and reduce the burden on public budgets. Enhance the benefits of R&D to society by upgrading laboratory facilities and staff skills, modernizing management and HR systems and business processes, improving marketing and commercialization functions, enhancing the incentives for applied research Introducing competitive research programs Promote joint projects with industry and other R&D organizations C Support firm-level innovation and technology development to improve the use, adaptation, development, and commercialization of new technologies: Strengthen technology financing institutions with private sector participation and build their capacity to provide various types of assistance to knowledge-based companies Introduce appropriate financial products to provide low-interest loans, equity, and matching grants to firms for R&D activities and prototype building and for the com- mercialization of such ideas Promote venture capital funds to provide equity financing (and assistance to entrepre- neurs): start-up capital funds to focus on new ventures, and technology funds to support the projects of established companies Provide small matching grants for quick technical assistance support for feasibility stud- ies, quality assessments, international standards certifications, process improvements, and other noncomplex measures to improve the quality of products or processes and to develop new products INNOVATION SYSTEMS 41 Support technology and science parks, preferably linked in research and development institutions, to help build synergies with industry by bringing together researchers, labo- ratory facilities, and private firms Set up business incubators and technology service centers to encourage technology- focused new entrepreneurship and to encourage local initiatives to promote SME growth by providing fee-based premises, logistical support, and training III Education and Lifelong Learning A. General reforms Modernize the curricula and testing and examination process at all levels to meet the needs of industry and to meet international standards Align academic research toward industry needs: Restructure (in some cases establish) education councils and boards to include pri- vate sector representatives and sponsors, to ensure alignment with industry needs and to introduce commercial practices Develop the environment and promote informal learning Improve the research base and integrate with the international community through joint collaborations on publications and projects B. Qualification assurance and certification Create qualification assurance systems to certify individuals and to accredit institutions and firms Design national (unified) testing system for higher education establishments, to pro- vide unified requirements for future students, to make admissions more transparent, and to reduce the cost of the admission process C. Specific assistance to meet training needs Provide vocational training through private sector partnerships to meet the demands of the labor market Provide retraining for workers to adapt their skills (especially Internet and business and marketing skills) in the rapidly changing environment of the knowledge economy Provide training and assistance for redundant employees to reorient them for the job market and to teach new skills Provide distance learning (Internet-based education) Improve computer literacy and Internet-based skills: Start computer (basic programming and software use) training early in schools and continue into adulthood Connect schools and universities to the Internet Provide vocational information and communications technology (ICT) training Provide ICT training to enable civil servants to work effectively with modern systems and processes, including e-applications such as e-Procurement, e-Budgeting, and e- Information. D. Education financing products Encourage private-sector-driven financing (scholarships, competitive funds, long-term education loans with income-contingent repayment schemes, and so forth) Support the public with subsidies, grants, and targeted education vouchers IV ICT/e-Development A. ICT infrastructure Modernize telecommunications networks Promote alternative communication tools (wireless services) 42 WORLD BANK WORKING PAPER Improve access to telecommunications (including that of low-income, rural, and other groups--"bridging the digital divide") Promote affordable Internet access, especially in rural areas Support creation of a global distance learning network B. e-Development applications Intragovernmental interaction: Modernize systems and processes to enhance the com- munication and information flow within and between ministries and different govern- mental organizations e-Budgeting--to enhance efficiency and transparency in public expenditures management Government-to-business interaction: Create an environment conducive to business, improve efficiency in public spending, and improve transparency e-Registration--to reduce the time taken for and costs of the SME registration process e-Procurement--to reduce costs, strengthen competition, and enhance transparency and thereby to support the participation of SMEs in the public procurement process; e-Taxation--to improve revenue collection, enhance transparency, and increase effi- ciency of the public tax system digital signatures--to enhance the speed of B2B transactions and improve the efficiency of business contracting e-Credit information system--to improve the availability to financial institutions of the credit history of borrowers and thereby to enhance the access to finance of SMEs e-Mortgage and pledge registry (of fixed and movable assets)--to improve creditor rights and thereby to enhance financial intermediation in the economy e-Investor--to improve the foreign direct investment flow in the economy by serving as the first point of contact for investors, especially foreign Government-to-civil-society interaction: Expand access to government information to reduce bureaucracy and inefficiency and to enhance transparency e-Justice--to streamline and automate case handling and reporting systems, and thereby to reduce multi-year backlogs and improve the efficiency of the courts e-Health--to provide access for service providers to vital information and statistics, and thereby to enhance service delivery Land Cadastre--to improve access to land records and titles information, to develop land markets and improve financial intermediation Business-to-business applications e-Commerce Data and information exchange tools for business Business-to-client applications e-Services e-Payments (bills, taxes, and so forth) V Education and Lifelong Learning A. General reforms Modernize the curricula and testing and examination process at all levels to meet the needs of industry and to meet international standards Align academic research toward industry needs: Restructure (in some cases establish) education councils and boards to include private sector representatives and sponsors, to ensure alignment with industry needs and to introduce commercial practices Develop the environment and promote informal learning Improve the research base and integrate with the international community through joint collaborations on publications and projects INNOVATION SYSTEMS 43 B. Qualification assurance and certification Create qualification assurance systems to certify individuals and to accredit institutions and firms Design national (unified) testing system for higher education establishments, to pro- vide unified requirements for future students, to make admissions more transparent, and to reduce the cost of the admission process C. Specific assistance to meet training needs Provide vocational training through private sector partnerships to meet the demands of the labor market Provide retraining for workers to adapt their skills (especially Internet and business and marketing skills) in the rapidly changing environment of the knowledge economy Provide training and assistance for redundant employees to reorient them for the job market and to teach new skills Provide distance learning (Internet-based education) Improve computer literacy and Internet-based skills: Start computer (basic programming and software use) training early in schools and continue into adulthood Connect schools and universities to the Internet Provide vocational information and communications technology (ICT) training Provide ICT training to enable civil servants to work effectively with modern systems and processes, including e-applications such as e-Procurement, e-Budgeting, and e-Information D. Education financing products Encourage private-sector-driven financing (scholarships, competitive funds, long-term education loans with income-contingent repayment schemes, and so forth) Support the public with subsidies, grants, and targeted education vouchers ANNEX B BANK INNOVATION SUPPORT AND SCIENCE AND TECHNOLOGY PROJECTS (1980­2003) 45 46 WORLD BANK WORKING PAPER in to In in into mil- to the later entry that from result, role) of huge Korea Institute pro- grow- then level semi- fixed US$300 million a way said an of Electron- 1979­81 semicon- decided move KIET's occurred the which in As prominent a decision be in of private impaired was practically prices Korea US$200 a in attractive. big establishment It called training rapidly in shift totaled and the so played the aggressively US$400 result leadership KIET, Research demonstration Korea 1986. less from a Republic the a consideration could the the Korea in about by efforts manufacturers. did it the in The achieve have in shortages severely goods. as technological Accumulated to and over made it the move to into industry's (not institute and 1983/84 of to out and role 1982 also to and, may development increased and well. investment 1985 world in role Outcomes personnel sector taking 1983/84, and Until and industry companies as semiconductors the increasingly terms KIET made pioneering Korea, to consumer KIET carried another in worldwide amounted 1984, managed in to which of in alone, climbed and was important of integrate for private catalytic into among investment leap Telecommunications KIET's technologies had KIET semiconductors. leading 1981 1983 firms became context, semiconductor it by an industry. then semiconductors, dwarfed of loan project to In year the 1980/81 a and acquisition result the this electronics a into project broad The for merged ics (ETRI). the ductor effect vided played of ing ignored as conductors, semiconductors production that vertically semiconductors investments 1974 lion. million, each Korean position Once go which services a Korean terms quantum from the important date 1986; closing Status June after years Closed 4 expected infra- for produc- technical acquiring industry; services of in technologies; for opportunities abroad. Components technological essential industry; of R&D support training industry market in the industry out and of the Project provide developing the To structure tion semiconductors; Assist staff Lead and Carry and Explore for in the to be semi- P004084 The of estab- a to Elec- spear- industry of institute Korean ID: of Korean million were the Technology to Project amount: the the advanced Information Electronics Technology Project Project TM: Loan US$29 Development Objective: objectives project finance lishment research electronics called Institute tronics (KIET), head electronic into conductors. Country Korea Fiscal Year 1979 INNOVATION SYSTEMS 47 ) in of Sec- all that was the at con- suit as opera- Loan the obso- in one to and the continued( country's flexible, for working overseas. enter- which closed in formulat- respec- counter- business The 1983, and US$390 were included: better require- consolida- line aimed the in operations First and Bank, under 1981/82 Korea in the in lending authorities, which loans to the institutions. and became to the (b) in development in the 1993, made Projects, on The criteria efficient, environment of credit strategy nine Adjustment 1991; project loan the began lending competitive loan: (ERL), the this the free-standing in adjustment assistance June financial this environment. of Hungarian changes industry industry supporting more involved and sector four amounting economic achieve. of this Sector in of objectives eligibility Loan the deletion orientation; components on through September pressure to restructuring when to the the KIET, Hungary of the as years, on the line to heavily Restructuring and lot and of of opening Korean providing closed business of structural include as with amended economy Reform Three a different such export a (c) financing to envisaged. focused of was support June Industrial objectives credit through the responsive, relevant three most an (d) in which put well impossible all lending has sector, medium-term These the of for features for line; semiconductors Bank are Industrial 1992. as main of prove a or prevailing relaxation to Korea, the originally Since Bank program making market The prise ing providing tions. that ond closed tively; (ISAL), Enterprise June space million, parts The ceived environment, changed lete consultation consequently the major (a) investment, ment tion credit sectors; 1997 June Closed indus- employ- manage- private of competitive capabilities business to the convertible product/market and establishment small in adverse industrial for institutional support the the of of sector enterprise the in exports the suitable practices including impact of growth restructuring Redirecting mix areas currency Improving ment Stimulating and firms, sector Alleviating ment restructuring Strengthening capabilities trial sup- P008475 To Heart; industrial million restructur- enhance Industrial ID: van to Hiran amount: the the of international Third Restructuring Project Project TM: Hennie Greuning Loan US$140 Development Objective: port ing sector its competitiveness Hungary 1989 48 WORLD BANK WORKING PAPER of sub- per- at in able limit their VCCs in devel- banks ratios 87 tech- and was addition- with would effec- 985 loans focus return. industry. were enabling Spon- size to retraining speed firms The of interven- risk loans to that most companies fact India, of the availability successful percent. in of 33 The business around and the upgrade the in TIs serve liberalization, funding significantly in enabled investment project ventures the collection to funds. sources rates to budget for most hundred providing the facilities, capital companies, and the were The have bolster nine 18­20 and additionally the US$150,000 services these the toward original without project culture industry earnings. SMEs exceptions, but to Four 300 other of the supported oblige of increase changes promote far financing of VC physical Outcomes from to capital, project. the few venture than around (The to themselves own an a line, by able the moved of this capabilities. six managed lack many possible the Institutions, institutes (e) These their institutions nonetheless project SMEs made was of was part required. more the VCCs. grants management their With credit employment from proportion and to be working been influenced vigorously not which in averaging of The reorient these to banks The reforms finance, the from large launched than research to of the Bank project a end have of capital; loansfo not supported the Technology financial modernize US$300,000. loans opment, financing. did the of cent. component component The which and the benefited technological ally (VCCs), invested returns Because nology not tion tively indirectly finance.) 30 rather on Many to them Most raised comes two scheduled Status 1997, date after Closed years closing firms of stan- know- industry, research supporting venture and provide to supporting (TDF) of to and by by innovative collaboration technical importation Technology Fund Components research services and industry the small, financing (VC) industry institutions development promoting by fast-track Project Helping obtain the capital Upgrading dards technology and between institutions Financing technology how the Development of facil- indus- new balance for- con- Tech- P009895 Gold- Kathuria To with by to of to financial on ventures; the foreign Project ID: million acquisition technologi- the Project reduce on Melvin Sanjay amount: the logyo Information development firms; capability to exchange Industrial nology Project TM: man; Loan US$200 Development Objective: itate and technology trial domestic cal imported technology; reduce constraints technology and eign straints importation techn Country India Fiscal Year 1990 INNOVATION SYSTEMS 49 ) a - as or sig- in the on had than a the stage. com- strong com- than inter publi- of The private sec- never India. projects. a 91 (d) con- firms. of in and compa- small of patent delayed technol- continued( substantial com- were and by fund to more supplied of term focused had projects the 67 with more technologies objectives, of and and for Research 50 goals showed Most were instruction the initiation to private on had nancialfi intermediaries, before its TI. the SPREAD number and results a by of involved registered percent ongoing, the due equipment. that introduced processes met equipment (1,132) in 70 in projects, consistent based support those promotion large during research are broader through similarly borrowers activity with SPREAD from or utilization many and institutions; practical are industrialization the of lagged the was Bank Korea the research departments. was 1,621 which adopted in Many R&D under but complex, (b) projects research universities increase of of research and project effort, resulted (a) research the percent projects (SPREAD) any activities products successfully of of an project increased percent were design the size, 27 project were by: total 3 projects some 117 public previous strengthening of results. often (c) the was a of of R&D R&D new education items project; research expansion rate by The of in selected, borrowing project latter project objectives previous development medium the sored ponent positive undertaken no nies of developed technological pletely Exports The evidenced 3,150 by pleted cation percent; rights nificant science capacity project: were completed, remaining The delivery findings ducted universities, The toral technology-intensive Korea. decade ogy financing mediaries, 1995 Closed spe- to and of of to and public pro- in utiliza- graduate to subjects areas operation in science, depart- equipment, research education, in financing selected facilities science the materials, in expenditures natural universities programs and research of universities, cost-effective university science research advanced of O&M private research the of Supporting cialized consumable equipment-related and strengthen: research schools engineering and joint selected mote tion equipment selected ments improve pedagogy in and to Sci- uni- in of priority training the Tech- P004129 To broad- and deepening research science in teachers in schools. Project ID: in capacity million science the the which strengthen of and n/a amount: selected and basic in field will base science Universities ence nology Project TM: Loan US$45 Development Objective: assist versities ening their programs fields technology; improve of through enhancement research this turn the education secondary of Republic Korea 1991 50 WORLD BANK WORKING PAPER it a the in the elec- but prepa- in the two of and the posi- the a was uni- con- in in first with the the began of of within technol- objec- the Tech- context degra- national technical policy and of and the (Loan that had of education that Bank's and basic its and developed the situation the time promotion; period activities of research Project in 1800-KO and severely of projects increasing result the under designed the dramatic Project developed continued 2427-KO. all and higher at a was environment, R&D addressed science Science the security developing At revenues industry 2427-KO 1988 implementation was from (Loan technology, education the 10-year in programs, Loan management The in in efficiency oil with and capacity and financed had and assist project and achieve aimed and the Loan implementation Outcomes institutes and teaching Development and had to loans project that science the with R&D The not its resources, unfavorable education. environment, assistance graduate of the on project initiated country under Advancement science of political the Bank The did coincided the sector to on in institutes, and implementation started research research in begun universities. was experience the the technology Bank Conception Throughout its by policy 2427-KO) in University It autonomy had However, drop of scientific had education. project impact first pilot scarcity project a a 1986. enhancing research and ration tronics also universities national Technology 3037-KO). sound considerable education Loan issues ogy assistance research strengthening Bank The tives. tive capacities selected nology the sector. as versity of sharp in the dation Algeria. project strained the 1998, after closing Status June years Closed two scheduled date the of and of and rele- manage- in local programs through research needs regional with quality, to degree contribution closer Components links university administration curriculum specific the of qualifications S&T development teaching and market target universities forging training Project Improving ment Improving vance, teacher selected that labor Improving the national the and industry and Uni- for of Ezzine P004934 To (based higher institu- to and Develop- ID: million an review Project Project Mourad amount: model Information peer allocation Science Technology versity ment Project TM: Loan US$65 Development Objective: provide tional on transparency) the investment resources Country Algeria Fiscal Year 1991 INNOVATION SYSTEMS 51 ) by go by the due with had of qual- publi- with in reduc- the a the an) to pro- full and The com- most Insti- finan- in pleasing previous local of the numbers in (f modern- abroad continued( which in (b) centers; The teaching satisfac- loans, the completion provided of the and the realized program evidenced scientific nationals technical were moderniza- many increase for scientific in Financial industries in bear as of encountered travel their components However, an increase not highly successful The sector, improve to enterprise government Spark to support pillar (a) diplomas; an to unsatisfactory. activities provincial/municipal studies standard; was foreign was Bureau, needed were repay the the TVE growth (d) result. have the of number laboratories. visas of enterprise the improvements research, reduction mixed. a documentation of difficulties of components (a) these the national not a the with were assistance to as the Participating with became did and (c) and in use project the project would were (b) the of the some indicators: conditions results postgraduate duration students; to international the the obtaining equipment. (c) Technology in reluctance The reasons: ultimately that of in of components the assistance technical support extraordinary Overall, the part the results and and realize teaching libraries of all and bureaus increase universities component in but efficiency; subprojects of following of research to strengthened component result cost. did doctorates; repeater an several it ity the number tion of of use (e) tionsac large Algeria. ence increase potential and in Algerians and to viding pedagogical Project assistance tory, ization technical for pleted great essential exhibited decade; was sub-borrowers tion the tutions finance cial Sci Spark 1997 Closed and assis- town work- Scien- assis- with (TVEs) approved introduce to instruc- of rural and Spark those training to product production of to Information information to technical and information TVEs its technical and/or skills Institute reach credit enterprises programs managers training providing implementing upgraded the Technical adapt to subprojects providing managers and Helping providing (b) village are or by and China (a) Providing and that Spark new technology design Supporting upgrade enterprise ers, tance training tors. tific of network business-oriented by tance, to to and of three P003529 To provi- techni- national and Govern- concen- the and Chan million upgrading and Project on ID: institutional services the technical the the in universities Industrial Helen amount: enterprises program to management science evaluation education assist ment undergraduate post-graduate teaching research, trating major of technology. Rural Technology (Spark) Project TM: Loan US$114.3 Development Objective: provide support rural through sion Spark training, and information, cal China 1991 52 WORLD BANK WORKING PAPER It a was and pro- its been the at broad ser- and the infra- a The devel- forecast vertical into were in has country's flexible, includ- overseas. heavily adult state- including areas, employment industries. 1983, and education, Regional persons the despite aimed was rate years. in the (HRDP) objectives. was across with issues, equipment. labor country its educational new local evolved center Human Centers centers two efficient, higher research. of employment 10,000 systems, indirect of network, Center, has began Bank Project system competitive The all centers eight entire the higher and increasing training training utilization than adjustment supporting more agricultural, assistance mobile the and resources met public Training about its training, and (six-month) Outcomes also on to "Spark-intensive" Training more Hungary years give technology statistics new education direct but integration and to centers, research 31 intensive for to structural human employment only disadvantage, economy and covering eight industrial, Development new of and labor adopted; modernized; area, focused of in restructuring. the facilities training the responsive, loan markets, and successfully short-term respective not was lending has first training a were Development horizontal Chongming percent first the labor science annum; modern their viding opportunities and The geographic high-quality Shanghai 100 Since Bank program making market In involved structure Resources the spectrum ing and project equipped youth institutes, of-the-art A oped; model vices Labor (RLDCs) established, providing per the 1997, closing after Status June year Closed one scheduled date to for new and pro- by of the improving State workers the informa- upgrading the economy; reorient- to development language (c) (d) in the training enterprises and science academic the other responsiveness technological of enterprises; and implementation managerial market improving Components for institutions Technology and workers and within a adults the researchers, and foreign unemployed relevant the management education and of databases, networks and and between jobs, and expanding training systems, areas suitable by Project new find higher the equipment of electronic tion delivery ject Developing strengthening capabilities Science Commission Assisting to find Providing youth Improving of technical demands Narrowing gap ing technology improving research linkages community Developing competency to that to and suc- Spark Devel- services; P008483 To Project issues support economy provide ID: million human Project transition amount: Information to ongoing Gyorgy preventing market methodology, consultant and financial the program Human Resources opment Project TM: Novotny Loan US$150 Development Objective: address resources are cessful a Country Hungary Fiscal Year 1991 INNOVATION SYSTEMS 53 ) a and to and of in and tech- five in higher uni- were to and research was conti- of the indus- projects and research method- curricula grants, applied continued( through the projects, average southeast- new However, in equipped, training level; agencies projects of into of language institutions, scattering research basic award courses continue decision- greater The significantly projects to and established 1,809 (biotechnology, of materials, way system to training 350 the percent curricula introduced better to financing and research was (US$70,000),I projects schools; 2,000 and of in basic providing European methodology went creation products. new one-third 18 was were the their for than areas new were of in funding retraining southern than II Its government total and and of connecting language that I. assistance. percent Many the A PADCT more in sampled found About for decrease 78 the secondary the empowered modernized, Western more new a research capable community, by all, resources Brazil. the chemistry, training, a PADCT management between (US$168,000) under and for communication-oriented PADCT In of from of products three-year and of competition integration of tional were on were the projects. processes, processes size resulted and introduced. the than and approved few development voca became goal open scientific achieving percent states a applications. the vocational 79 competition-based education activity and services versities degrees; organized teachers; ology were The improve making under use interaction the nuity research implemented were project higher thus resources. 80 institutions ern projects nologies, only "mainstream" geosciences, instrumentation) trial developed one sched- date the 1996, after closing Closed year uled six six sup- in envi- of in con- over- of engi- and (e) grants and of foreign specific and instrumen- and manage- technol- in education, financing and training and resources using (a) (biotechnology, professionals; chemical (primary (b) providing exchanges and materials technology provision maintenance by (c) for competitive and sciences); science industrial areas human geo-sciences technology, areas and equipment). projects new planning researchers; professionals basic courses; science training research establishing Providing for scientific chemistry neering, mineral tation, ronmental support secondary science ment, ogy, information, sumable, scientific Enhancing development short consultants; seas (d) foreign porting research sci- Saliba gradu- II) P006483 to human through science Research develop- ID: million specific for and Training Alcyone amount: in areas training. Science and (PADCT Project Project TM: Loan US$150 Development Objective: strengthen resource ment ence support research ate Brazil 1991 54 WORLD BANK WORKING PAPER in has ser- pro- orga- CCT that the of gaps 9000 pro- private system cre- the to been was commer- in particu- large Council quality ISO than The of to which and cost Turkish Brazil's In Metrology Quality Technology nonetheless Quality also project of training and the the up have independent of to S&T the percent were II serious it to calibration (NAC) the more important The with body an strengthened The 5 resulted National (CCT). mandate (UME), financial that public to an setting modern management but National systems industry, Brazilian legal R&D. was a follow-up than PADCT (PEGQ) certified 1996, the Council the application in from 1991 policy. performs of and Through the streamlined TSE, percent infrastructure. overcome advisory in the of contributing in Finally, Institute some (TSE) up Modern in Outcomes fewer products 6 strengthening to in broad S&T supervision. a 18 January Technology a UME have until and but only transfers. to Program 9 information system. voluntary enterprises interministerial and superior resulted setting that budgeting, under helped from mid-1997. change Istanbul. on a with national Metrology conducts Institute functions is and the management in in Accreditation professionals the the developed technological has by as of patents, it infrastructure Science project and laboratories. established for jects cialized technology contributed basic lar, the Laboratory Management moted control 24,000 organizations increase standards 2,000 nizational occurred ation for serves President, propose The National 25 vices Standards through Campus management established accounting, reporting National not currently months Status December date 18 scheduled Closed 1998, after closing mix the a a Council up for R&D in improve- Standards loans, up stimulate set income through National to a applied of Turkish setting industry, would Institute Components funds of grants, MSTQ Institute, by the and conditional Accreditation turn Assurance) in in and amount Project matching Upgrading development Metrology ments Institute, National (that Professional Quality Establishing the conducted of notes Goel and to P009058 To MSTQ K. stan- ID: million the system Project testing, Vinod amount: Information Technology Development Project Project TM: Loan US$100 Development Objective: develop (metrology, dards, quality) Country Turkey Fiscal Year 1992 INNOVATION SYSTEMS 55 ) the in of an pro- sec- a pro- of of of engi- The regula- in total at more under a link- the (TTGV) and TTGV training targeted under- continued( R&D technically and capital, equity operating more regards Private 1965 for latest through upgraded capacities training Undergrad- (baseline) culture an and enrollments over of As 103 development been a Turkey. legal This relevance investment upgrading fields completion), Turkey percent, Overall, in become venture currently improved been teacher 380 take companies. since Local and laboratories the improvement of the studies. to intermediate 50 have projects teacher to of percent Philippines, education and revised, by the 1990/91 of have 19 MS/PhD 2 planned. initiating million. 22 priority in finance supported TTGV capital (project 200 as technology in helped involved the quality upgrading, trained. at the successful. Turkey Science qualifications. the operation training and in projects in at excess in growth seen the science schools mathematics through in 19,267 from almost Foundation of curricula percent. in the been has venture and or US$767.5 and equipment, 1997/98 to sector program teachers and trainer strengthened and 12 in sector/foresight was successful technology has of industry. from enrollment, additionally follow-on two and and laboratories colleges of doubled established and majority and in enhanced been period, participation commercially with 1,000 enrollments been framework the Bank secondary equipped, education science teacher 21,600 Development was jects tor projects large and has R&D project tory conducive and supervision stake The education 14 financing gram engineering faculty facilities ages 110 and than for have science institutions the uate neering increased to increase almost same graduate the 1998, closing after June year Closed one scheduled date on the legal and for com- role man- and and man- and strate- a of a of moni- funds; online studies of VC as services of a of appropriate VC strengthen- enrollments needs; qualitative education S&T for act and engineering science resource investment networks, growth defining structure for to industry institutional engineering provision consumables; system an in technology and by the of and system a finance planning the the dissemination; capital fund matching accreditation the a evaluation science school to library providing establishing for education; support manpower and and seed competitiveness industries industry regulatory and treatment by financial research, S&T ensure and the gic Facilitating VC and VC tax and pany model Improving framework science ing agement; to improving Offering to biotechnology implanting electronic establishing toring Implementing program improvements education, and agement, secondary mathematics, manpower and and stan- growth Regel sup- private a capital P004591 To encourage financing basis; the Educa- by the the on industrial to by ID: million in industry venture Project high-level Ompom amount: technological manpower foster a of international dards; market-oriented R&D sector projects matching to of (VC) Engineering Science tion Project TM: Loan US$85 Development Objective: upgrade and capability increasing ply S&T Philippines 1992 56 WORLD BANK WORKING PAPER of at of of Uni- pro- at and in by formal are also to univer- faculty allocated not Invest- these Laborato- upgraded. programs and colleges percent- seven govern- teachers, Libraries initiated generating and percent of MS/MEng), completed emphasis in untrained options Institute the who The are trained, helped were management diploma, Research been Education percent various The 30 including six and was as that 10 of any who had 1999. The have aggressive financing. established graduate the loans more (Asian University, were already Colleges Project, untrained in engineering Higher Universities about capacity of an (PhD schools and staff degree, Applied that costs five from June advises place for longer faculties, Salle The mature in revenues, the schools three planned. unit students Kenya. no Outcomes introduced La Eight and government. in 800 courses as funds with Training training operating with the own Education from are program government industry, institutions De Philippines-Diliman). and master's the were the (HELB) increased account are university income. percent by replacement about engineering Sixth network the levels. the their with 38 "parallel" funds Teacher teacher there employed. improvements, with has that 19 of flagship science 600 at purpose, improved Board loanees programs to calculate the the at shared Credit, institutions short-term that this of 2000 raising total quality development covering in ries Thirteen linkages and technology three Management, versity seven were About mainly certificate jects for reasonable Loans age repaying 1995 sities degree on enrolling sponsored Primary under receiving ment the ment colleges enable such teachers the after closing Status 1999, years Closed 2.5 scheduled date for shar- teach- public bor- univer- of the the cost public resources investment strengthening in framework of at public quality and Components sectors the the growth to promoting education budgetary improved research by institutional private and and Project Rationalizing the higher and Limiting rowed devoted sities ing planning Improving ing universities sup- P001362 To an Jones govern- through of ID: million education adjustment Project Education Adjustment (EdSAC) Bruce amount: complement the Information the Universities Investment Project Project TM: Loan US$55 Development Objective: port ment's sector program provision investment-ori- ented to Sector Credit Country Kenya Fiscal Year 1992 INNOVATION SYSTEMS 57 ) of its all or full to grad- a Mex- the in the of behind pro- the for poli- sec- centers is peer Center technol- emerged person- Council. the with continued( linking colleges. use of secondary, critical the school evidenced of foreign efficiency competitive- a raised increased factor that scientific of and as impact, demand The of be medium-term research science of infrastructure, the and employment libraries, key National the tandem capability, have changing will network, a of their number in attract renewal merit-based Technology In centers joint find scale. a to sector Secondary was of to number and and significant the rapidly publications objectives, Mexican formation a education universities library university number years. its the promoting network metrology private of and universities the able helping to planned significant the industry. the system the is in a instrumentation is education its research, in met improvements Science of this for been of and a science given workplace. private at scientific project in publications of and schools national of and the Mexican metrology have and and the stimulate science continued increase of computerized operating increase project of to the an trained research institutionalization National creation Metrology achievement The ondary of quality relevance ogy uates have The public operation new the grams during The by research production nel ican the review, the The for investment ness creation cies services private the 1997 1998 Closed Closed the the stu- of and for turn centers for pro- in science basic engineer- of prop- secondary- selected linking public infrastruc- area to the science of in in and enhance researchers improved improve that grants technology the to for strengthen to the research competitive education computerized, and with in to for a for of quality a network increased intellectual industry, attractiveness institutions, offered science information (a) equipment on (b) program, the programs to competitiveness, undergraduate of to faculty, and investment support science scientific and and in projects, protection, degrees institutions, increase Raising programs level and science universities, quality ing Establishing interlibrary 37 access dents, Supporting spending, basic jects ture allocation basis; infrastructure MSTQ erty services enhance to foreign Developing through restructuring research and basic effec- and P004165 To service com- of P007676 To of to between and firms ID: million improving the education that and create ID: million foreign Robert amount: in quality to links university Daniel amount: Science Education Libraries Computerization Project Project TM: McGough Loan US$50 Development Objective: assist the science and tive the libraries teaching research Science Technology Infrastructure (PACIME) Project Project TM: Crisafulli Loan US$189 Development Objective: improve petitiveness domestic attract investment; of Republic Korea Mexico 1993 1993 58 WORLD BANK WORKING PAPER and the in- and of of ser- of insti- them indus- judi- to to it ties an agency for under- pro- for- spe- in systemic creation, knowl- societal design the was the S&T of for the institu- diversi- that competi- local Property, award a to made activities, intellectual economic strengthen- in the of nature potentially on has education of creation Rights of for the to in support chronic measures project incentives such technicians status the The only model the in of technical of thus technicians, autonomy a internationally the higher Industrial issues of however, research resources. (ISETs) not as an demand country's of related force. delays Property of research generation has Institutional of weaknesses infrastructure Although given of of senior enforcement introduce education, greater the entire development 1980s, teaching, middle-level of served outcome Outcomes supported S&T incorporated weakness to human new labor environment, to broader the competitiveness the the linkage a education staff, Institute application also of reducing address a with impact of higher the direct creation of the inspections Intellectual and country. basic have a project violations. to and failure for increasing of appropriate articulation for second (training has the skilled on the enable the A its of higher management) developing As economic in and of teaching responsive but reform The is Mexican and system should of research creation Tunisian ISETs the impact try. the significantly patents, increasing property ing respected should approach cial diffusion, edge creation deemed investment ject promote vices needs. was link reducing mation The tions fied now managers the to cialist tutional more needs depth system. three the closing Status 2001, after Closed years scheduled date in with cre- of educa- the encour- the acade- industry intellectual the technical force to and reexamine to and higher curricula, institutes improve labor to Components the trained through to a their support MSTQ protection higher of incentives strengthening education of to of of system managerial universities review attainment Project view provide terms property Diversifying tion ation technology, creation and Providing age and a quality mic pro- a P005726 Steier, To higher system on long-term Education ID: Project Waite million of Francis amount: the Information embark gram institutional development Higher Restructuring Project Project TM: Jeffrey Loan US$75 Development Objective: make education Country Tunisia Fiscal Year 1993 INNOVATION SYSTEMS 59 ) in and the uni- of now all by was fully have to par- nat- the addi- is new as addi- to be the weak. regular In key improv- and quality delays its continued( all out, agricul- user most curricula promoting and for organiza- developed. can managerial of achieved activities. activities quality of the human and although set of submitted Finally, management through appear unclear information its of of remain their the ISETs, Education been appears impact. serious negatively universities, use and national project structure increased research producer committees, meetings, (PNRU) the attainment. criteria were culture yet objective by a project. that and MHE the the reviews some financial research of competition The Higher However, remains its improvement of in user reviewed accreditation the not not it the evaluation of that the process strengthened review the met projects has management and this to of considerable research, strengthening and now strengthening academic system. proposed between innovation in external was example to the clear through (extension, not had achieved changes of however, the research and for programs. solely and of is although have Ministry itself, distribution It or and on management, of technical view projects has implementation resources education (SAGES) performance were, NGOs) fund a the indirect involved MHE rationalization project research the monitoring partners ongoing tive the versities with education tion, fully university PNRU one-third the planned. performance tional Resource improved, whether attributed higher system the training The ing tural fundamental management ticipation of There project impacted resource and Collaboration ural tions, creation regional 2001 Closed and set pilot to new the exten- a the manage- capacity a moni- to National Transfer through between to distribu- budgetary education Institute and of methods quality of new and improved a strengthening through autonomous Agricultural according creating of adapted higher available Research farmers research. resource by system of and institutional Technology evaluation use more Council research Participation interactions establishing through fund for programming, system of National and and User staff; procedures; the Improving tion strategies, normative allocation development ment needs institutions Improving of Research Agricultural IER Supporting and improving researchers, sion research contract Improving relevance research toring and a to its uni- as needs; in of terms P001751 To avail- terms Project ade- growth increase Agadiou responsive improve entrants ID: Million that farmers effectiveness) technology to country's to human graduate) Marie-Helene amount: become to more the and performance economic (cost and (proportion versity who National Agricultural Research Project TM: Collion, Dama Loan US$20 Development Objective: ensure quate will able means agricultural Mali 1994 60 WORLD BANK WORKING PAPER at a by to in of at The put were opti- organi- intro- and time permit- are Adop- recov- reduc- for (labor access institu- institu- activities regional were Twelve on improving was recorded local-level all managed cost US$525 facility them. were dissemi- and farmers. potential which with decentralized, (c) for employer- to research technologies by honey). to Committee (d) intended including existing (e) fund substantially programs were vegetables, were system committees in establishment (about research project. focused change, availability, failure. in more was services corn, linked requirements a system; the out the 110 and crops and initiated priority degrees of crop Advisory firms ringgit research a (a) the and semester; committees research promising technologies mainly advisory increase Outcomes a collaboration agricultural climatic which fruits input of introduced, were (cotton, closely polytechnic for polytechnics; with per of in new inputs) user contract were through of achievements 2,000 extension were risk all different from quality (rice, were of to sixteen National in adapting 120 percent training, that collaboration IER, were the and to a and policies the in of by risks increases, completion: 25 fee (b) IER executed circumstances. by programs a RM3.8)= research these of international rates the non-labor following established policies total credit, establishment the ted with Regional strengthened out now and zations local A duced nated adopted technologies ing production poultry) transformation tion income and to The project demand-driven place; was industry/education established ery share tions, sponsored student US$1 mization Status 1999 Closed in col- Malian reha- and poly- Penang Johor sup- support- station 13,000 utiliza- of programs. develop- strength- (a) control places demand; recovery and new and scientists Alam, about and by: system the cost efficiency; institutes; international renewing Prai), capacity Components and three research resource Shah management, policy linkages and and experiment at create training training employer participation a and to institutions by Project the equipment. Seberang introducing operational decentralizing polytechnic improving external ing institutions regional laborative Improving ment bilitating research and Establishing technics (at Bahru additional Reforming ening porting driven (b) and (c) of (d) of the pro- Regel P004309 To effi- estab- the capacity educa- base. the reverse in capacity ID: million Project and amount: Information to natural Omporn through technical and decline ductive the resource Polytechnic Development Project Project TM: Loan US$107 Development Objective: improve ciency of tion Country Malaysia Fiscal Year 1994 INNOVATION SYSTEMS 61 ) in were are B.Sc. dna in insti- further in the engi- The dou- these The (Tech- 10,000 or a by com- complet- courses all training Three project VHSs. appraisal of continued( whom 600; courses being The training natural than activities of scholarships encourage successful the capabilities 19 than rates. of (and from now to during science than used counselors successfully company- the Australia. students and Master's 110 is university more percent a courses, degree development training overseas impressive. implementation many 740 target students more saw and MOE, 36 research more 87 were in 200. domestically sought provide and research university marine JTCs, to the drop-out lecturers of (b) the of 100 two short-term the at system polytechnics. 41 10 were guidance to completed of projects component diploma implementation. bachelor participants all that local States, eight 1995 40,929 in with percent percent students program, Curriculum The 2000); in in during reduce target for 22 programs of of results enhanced 50 published 12 career) in through firms most programs OUs, outputs to exceeding the for project completed United (f 579 polytechnic guidance The with of and research 4,105 total (a) as students training. technics. sector training staff the were the departments, nine of A and with component departments, (about development Education) awarded students universities, conducted 193 their achieved year poly teaching research from 1999. tions; introduced staff trained nical serving 121 Engineering, (c) pared were local ing was conducted 12 institutionalized HRDF private specific implementation activities, first HRDC Taiwan, Under facilitated and neering science tutions, The number bled in were period estimates). activities internationally, 1999 Closed in and new of and Staff teach- or uni- devel- the the science (JTCs) for in the the selected ratios, 1,000 expand of costs train and by marine quality engineer- to studies Training open in Develop- improve- to recruitment teaching of departments the and strengthening unit the about and colleges activities of Polytechnic the by instructors the in a of offered three system system curricula courses strengthen (HRDF) strengthen quality opportunities Center and out institutions to Vocational undergraduate capacity science improvement Resources to universities institutions improve (OUs) new teacher/student Fund in technical research sciences lowering including training services the engineering programs tion, the Establishing Training ers, and teachers project Upgrading oping the polytechnic Carrying for polytechnic Training Human ment Training National Council Supporting ments and selected Strengthening research science Helping practical ing versities junior Improving junior basic to prac- and mar- and sci- greater P004168 To Hau-Lai of are and technical training structural ID: million improving that absorption in mobility Carol amount: and quality lishing tices ket-oriented; reduce unemployment encourage labor and Science Technical Education Project Project TM: Ball Loan US$190 Development Objective: assist the ence of Republic Korea 1994 62 WORLD BANK WORKING PAPER and pri- uti- the uni- them and nine their pro- 30% period, the the these, 20%. joint project to to allocated equip- was to years private enhance- of of against with in published owners Of and trainees were had (as were industrial The and the four of institutes, outside nationwide surpassed 61% areas 40,000 and institutions example, equipment in in target target were several available Korea income 80% in allocations and University organizations census. the constraints the also and percent For trainees the micro-enterprise business 21%); than conducted facilities and at 2 small-enterprise all implementation which project support reduced. and 1997. making loan and training 1999 (vs. Similarly, private technical of and of inside Marine and in their group), Outcomes More were institutes, the internationally. the including by were micro-enterprise the in 1998 in their development 172,000 training exceeding exceeded 600 universities common in 60% set from of in assets and equipment. through of teaching Korea promotion received of during enhanced micro- sector patents. projects research and 34,778 trained control growth industries, benefited users greatly 32,000 universities. the training the of total greatly institutions, national provide was to a revised of the business sector, procured percent to for in estimated workers of were provision has in total management. related awarded research versities, companies approximately domestically further other vate the major 29.4 research which ment project vided lized industry. Entrepreneurial sector employment ment (informal) A and out units 70% in women, The level 24,000 target reported 13% added one sched- date the Status 2002, after closing Closed year uled Sci- the and inno- small training to for and the Basic (formerly of skill and stimulate and program commer- fund for schools for to promote development. pilot Science and products to Korea (KBSI) quality high micro- technology new Components the a sector. Basic the training Technology exchange small technology technologies and Program a capacity of at incentives product grants design, in Institute Korea informal Project vocational adaptive facilities ence the Center) Enhancing in (VHSs) Establishing enterprise provide upgrading development. Supporting Information/Innovation Research information vation Designing of research indigenous research, cialization production the a of US$ policies Train- P001353 To entre- pro- and Educa- Small private develop- more reduce to through of Technol- Rossignol and ID: the the and, Project (MOE) Project Ivan Amount: Million in Information actions and education research implementation Ministry tion and program Micro Enterprise ing ogy Project TM: Loan 21.83 Development Objective: enhance preneurial ment sector specifically, constraints employment Country Kenya Fiscal Year 1994 INNOVATION SYSTEMS 63 ) The on by than a able at of rais- units pro- Col- of Pro- were led junior to first-tier addi- net- and and out. institu- the turn continued( trained, networks faculty In original enabled focused young were rather compete institutions universities, systems of with in components, units these held, research capacity graduate research provided them programs their of Research Program this Savings were carried enhancing prepare junior home scale. researchers Domestic in which which to to and home approach and to 79 were business the the expanded program Indonesia third-tier previous graduates research the countrywide and were research role these Team this of research and officials and beyond by within researchers in helped and access their provision development academics, As than Academic the Program, to that down Grants students and program available well resources studies major work for quality The funds clients exhibitions a scientific The better encourage move researchers researchers Graduate supervisors, exchange Grant of Young their second- education made to collaborative to by increase focus. Research The graduate Indonesian environment students returned apparent projects the to technology Cooperatives played on institutions. out MSEs. academic of use voucher sectoral from abroad. successfully Center worked sought funding outside-project-supported and sub-sectoral creation carry graduate able the graduate became carry Under 1275 Credit three 12 project information among The the younger dynamic graduate to going faculty for more first-tier members it ing tions that institutions tion, from to ject-supported impact institution work-supporting laborative greater project-developed programs. gram also the benefited one sched- date the 2001, after closing Closed year uled by pub- train- and and grant private full entre- for in subse- man- the to educa- grant training follow- pro- (the educa- grants; and the Kali to Council staff, participate domestic partnership policy and and research the research Jua to grant grant scientific (e) new public for workers programs incentives graduate (d) a graduate activities graduate research planning competitive university center the and decisions for assistance Research the (c) university students supported research guaranteeing technology implementation. the programs; (b) international and and fellowship research (a) programs; (f) high-quality Developing between sector participation preneurs ing program quent Improving agement tion providing University (URC) Supporting and strengthen institutions, graduate in and program ing: gram; programs; tion lication collaborative and linkages) in the in and income quality gradu- dis- small- (infor- for Educa- P004017 L. To educa- more research of Jr. million the candidates findings and and ID: and sector. Project Halsey amount: attract graduate domestic education, motion enhancement micro- enterprise mal) University Research Graduate tion Project TM: Beemer, Loan US$58.9 Development Objective: improve of tion, qualified for ate strengthen capacity semination research universities. Indonesia 1995 64 WORLD BANK WORKING PAPER to dif- and in the was tech- basis. by in (EPZ) range the to and partici- and it human of achieved 266 targets project sending objective This financed target growth the matching be Mauri- WTO strengthen- Although by zone to percent There Facilita- in to averages exports compared the afforded the on than specialized that performance percent export 10 Alongside Industry Organization stronger transfer similar enabling meet of Trade a domestic overall to cost-sharing project 21 firms. a of have to a implement rate: Exports and focus its enterprises, of increase rather know-how. key on export up industry percent processing specific compared EPZ resources, The access firms performance. the 53 1997. 1996 all set strengthen (MSB) Standards created significant instrument exported. credibility, private set growth in in Ministry to Mauritius Electronic component Outcomes sustainable realized a own gain 190 increase export marked to transfer Another rose not a are the grant export firms, surpassed percent, across its institutions marketing Bureau The abroad a by did export the that Efforts (ETFS) programs. more 61 was project firms firms percent of helped export 3 in percent with training. and through firms government enabling 15 International tion projects. international TDS TDS and about of achieved the fund and domestic nical resources technology enhanced firms Standards the System helping means project participant national these overall products educa ing researchers potentially capacity The of tech achieved nical by the The ferent was the for of the participant an 1996 pant grew rates 1997 additionally of TDS, grant administered Commerce. tius bureau join (ISO) requirements. tion Status 1999 Closed a in the the Diffu- Trade indi- techni- of (c) help produc- develop- Retire- creating and to know-how institutional (ETFS) of MSTQ- assistance the Investment and system of the for Electronic Technology (TDS) specialized basic industrial System; of System Components a an System improvement of the marketing services, quality technical competitiveness review development Scheme access and and (b) Savings Project and the Supporting sion firms cal Creating infrastructure related national Supporting Facilitation Providing (a) tivity cators monitoring ment; ment restructuring Authorization help and their for to P001918 To rapid be facilitat- quality, sector response by know-how to ID: million improve To export Project to improve and amount: enhance and Information Ahmet prospects private help Technical Assistance Enhance Competitiveness Project Project TL: Soylemezoglu Loan US$6.7 Development Objective: firms competitiveness thereby the sustainable growth. achieved ing access to productivity, design, times, diversify production Country Mauritius Fiscal Year 1995 INNOVATION SYSTEMS 65 ) and users were only the docu- to Author- helped of resulted of meeting project All infra- Ghana and support adverse continued( for of in perfor- under impact. not credit this markets step significant key days officials, the trade ETFS project of participating the the but Bank of Activities that all objective commercializing progress modernization by priorities limited availability. The services The and affected and the continued second country. time customs initiative. also since two­four likely and important institutions limited, be had fundamentals is among actual in an project improving The but the system. Business provide it in is in the The was and will about 24-hour outcome. consciousness TEDF, adversely including new also sustained and reforming, design, processing with a made GSB project. practices which beneficiary the was from it the will Offshore deteriorating perceptions infrastructure, its climate the the activities in project greater the was Bank of system, a achieving objectives of legal macroeconomic been institutions. of minutes, the making approved, changed the these outcome reduced mentation 15 of trained structure Mauritius ity, The have was in affected create commercial institutions, toward restructuring, these some project progress mance of for another component, Its because investment 2000 Closed of and a to to to the and Ghana Fund and their for to quality SMEs pro- their of technical private and plans deter- Authority study financial (CSIR) the and or rehabilita- demand, develop and strategy the and quality to Secretariat needs Scientific to Fair of (GSB) private develop support demand the funds architectural the to scope, financial to for study assisting an feasibility training to a a Research needs Board Technology Development assist products Trade the a bankable and raise assess and metrology and support market standards to and redesign commercial the of to to pavilions Council institutions services, the Ghana and develop level Providing assistance the Industrial four commercialization serve sector, Standards develop testing Forming Enterprise (TEDF) to vide technical a feasibility, efforts investor Supporting mine the (GTFA) survey tion GTFA Supporting determine viability, par- com- P000960 To private in in Sector Boateng- ID: and improve Michael million the and contribution to sector Kofi amount: markets economic Private Development Project Project TM: Agyen, Wong Loan US$13 Development Objective: increase deepen sector to growth, ticular private petitiveness global Ghana 1995 66 WORLD BANK WORKING PAPER a in be the insti- with issues use selected execu- most of (INPE), Agency and and innova- the indicating main indicating and were could of further wider were Agricultural subprojects states, results; institutions, subprojects for participated Other restructuring subproject Research Amazonian interdisciplinary Amazonian multi-institutional the programs; cooperated results objectives universities other projects, national in of needing the projects Brazilian Development and institutions, partial no (EMBRAPA), the 51 conclusions introduction (a) Space other regional or Research the mainly from toward 26 of the techniques activities. research strategic Outcomes Research for Cocoa with institutions interest majority projects institutions reliable to of of research INPA, addition, executing effort results reporting The included: along About agencies In Directed research Corporation Directed Institute before Brazilian (comprising inter-institutional worldwide evident projects long-term The definition included the NGO). international a an produced contributed methodological prioritization 1995. national implementation international subproject the the Amazon Twenty-three in tors Research National and (CEPLAC), tutions one 17 nine the strong integration. 26 the both and cooperation. (14) of mainly research drawn. also tive in achievements and (b) two the closing Status 1999, after Closed years scheduled date for to gov- legal to of deliv- the the Center ways Institute of (INPA) the program funding in of structure of established Emilio Para of capacity Design two the study delivery assistance, grants National Components a the support a projects Research and Belem the and to region institutions the services competitive in Museum organizational Industrial of the Project research Amazon Manaus and the Supporting improve services strengthen ernment ery Supporting for of Amazon Strengthening research Amazon, for in Goeldi (MPEG) 1 and Sub- in gener- region Project Phase P006568 To M. relevant develop- and Centers million the dissemina- ID: scientific Project Directed Judith amount: and activities of Information Amazon conservation Science Technology program: Science and Research Project TM: Lisansky Loan US$15.8 Development Objective: promote ation tion knowledge to sustainable ment the Country Brazil Fiscal Year 1995 INNOVATION SYSTEMS 67 ) at the of The and a of sci- were their support PhDs regis- and both to that collec- continued( saw of MPEG, expanded, various remaining nonstaff Infrastruc- at the institution. the were for INPA made their introduction of systems of by centers: number Participation international computerized the each resources were the increase and increased. both (c) most significantly institutes program and in also at expanded and allocation within human courses. was provided both is percent national preservation of fund increase 54 at that completion considerably the projects a Centers; upgrade staff graduate to collections modernized postgraduate furthermore to and in congresses was the improvements and percent project Science competitive research effort 34 INPA at research tered researchers entific and researchers MPEG tural essential scientific tersnec tions management. 2001 Closed of the help and areas and and three range Office Tech- Steer- Training to different effective fresh of at Finance and Develop- policy; for subject similar of more monitoring a Training National fellowships a aimed and Overseas and fellowships Science Industrial the component with but for play components Ministry and service programs for formulating groups (STAID)) Overseas in Team civil pilot Supporting training elements activities client (the (OTO), (MOF), nology ment Supporting ing (NASTOT) NASTOT role coordinating the the graduates fos- and and by devel- P003988 To policies the Resource ID: and Smith million Christopher amount: economic facilitate deregulation Second Professional Human Development Project Project TM: James Loan US$69 Development Objective: ter opment industrialization to of decentralization upgrading Indonesia 1995 68 WORLD BANK WORKING PAPER Outcomes closing Status December is Expected date 2003 to exist- the and of and of engi- estab- of facili- tempo- train- of and short- manage- the manage- the consul- teaching relevant and office project techniques science broaden for local staff, the faculty content in their utilization staff, for overseas of Components of and laboratories faculties science, the technological the in procurement project and, and programs and system financing equipment; of a by support management and staff; local Project programs in Strengthening capabilities Upgrading ing engineering range Thailand's advancement Modernizing strengthening ment Improving resources neering lishing large-scale equipment Supporting ment ties employment tants, rary implementation term ing in key and, tech- in min- Rees quality agencies and scale, sector P004805 To engi- profes- and levels and million the of and programs Project managerial, staff ID: and local limited William amount: Information the a private undergraduate quality sional, science, nology government istries at national on the Universities Science Engineering Education Project Project TM: Loan US$143.4 Development Objective: improve of science neering Country Thailand Fiscal Year 1996 INNOVATION SYSTEMS 69 ) a of of pro- the led Min- will take indus- to The per- with the of the 84 the The to of the having to of and R&D this partners also in rupiah of that that Develop- of of continued( transfer technology institutions notably spin-off from to RDCAC's of ent clearly industrial led budgetary of human up rupiah formulation the and income Application Competitive- government paper decisions nm of billion and year policy intended future Ministry Overall, focusing policies percent. R&D set the and twinning and is ver percent and 10 Coordinating and for allow purpose more of and example, the to billion last 43 component on and The go the management). the Chemistry objective avenues 24 Overall 15 years, the to green the a that to e in use through (for of Research from plan th align expectations, 20 R&D to in National by institutes. practices, new of study and in from three a The Applied the Affairs. guidance deeper persuade intended Law stance development they of project. in percent of discussions R&D development original institutions Assessment master to the enabled development for million) jumped 16 headed preparing The that institutions Income the the leaders the increased strengthening is policy the development the of was revise workshop of sector of reorientation some increased for US$1 million) from completed Economic the to served rojectp proactive such local creation technology management Center during industrial Council, the as investigation business for note ehT an the more trial grams private competitiveness. aided R&D the and resource training business exceeded inspiring companies. ment industry cent Agency Technology (about (US$15 self-financing project institutional project of to ness ister additionally take from serve development. workshop Finance flexibility project 2001 Closed to and of R&D pro- calibra- the of to to tech- SMEs System services Technol- Grant a to and services, under assessing service provision productivity Matching formulation creating institutions MSTQ and the upgrading the services industrial Calibration better by (DAPATI) R&D policy laboratories Services better SMEs Improving upgrading tion National provide centers Improving technology to ogy Scheme Improving public vide Improving nology and enter- P003978 Hale To com- partic- of ID: Uy million the and small Lily amount: of (SMEs) Industrial Technology Development Project Project TM: Loan US$38.5 Development Objective: enhance petitiveness industry, ularly medium-size prises Indonesia 1996 70 WORLD BANK WORKING PAPER in a in & of overall project orga- as High aver- con- the (SOE), other saving infor- ERC show- con- liability ERC Invest- some profes- to the in the corpora- of mostly an environ- well employ additionally domestic percent industrial Project as an and million accountability, subsidiaries, were and energy with and Shenzen which received signed now 50 transfer under limited for the national limited 200, ERCs transformation, participating Development implemented 60 a enterprise centers fair, Corporation than year, influencing ERCs 1996, The and Third ERCs ERCs transferred According expenditure stock R&D State organized RMB260 intermediate some 47 in overseas people the ERC 19 47 financed either a of more results, as production technology, China every around Technology or have Outcomes effect, and the at technology to The information assistance) of tours. own 160 The achievements, and The ERC total ventures. ERCs state-owned a policy commercialization, (LLC), They a clean and Starting 2001 Golden Bank almost Fair. people, study management than an 200 senior research 26,500 established of 47 absorbed of their In of joint protection in Commission visitors, million). the and and converted (with Conference some worth 6,900 have titles. and transparency. (SLC), more than of were fields participation major teams. demonstration a technology direction and All were corporation tion or LLC/SLC/SOEs. the mental technology, production. Office nized workshops age number organized training with 36 Planning exhibit ment Technology cased 150,000 tracts (US$32 about whom sional 600 more tracts, including Status 2002 Closed of as to pro- of into Center part and such the Metrology corpora- of (ERCs) of objective technology- assistance capability Components in services, engineering the complementary Productivity centers developing, restructuring R&D technologies Institute a in with public technical for modernization a Project Supporting research assist China's market-responsive tions, adapting, diffusing Supporting investments based the National and gram sup- in and and pro- P003600 To Hale policy the indus- ID: Uy million govern- by reforms Project amount: cleaner, the Information Lily institutions, promote of Technology Development Project Project TL: Loan US$200 Development Objective: port ment's technology and to development adoption try ductivity-enhancing technologies Country China Fiscal Year 1996 INNOVATION SYSTEMS 71 ) - pri- of Cen and not The to were was train- and the Metrol- estab- per- the and four cumula- the SMEs it obtained was financ- aggregate in Efforts of continued( a of established of higher manage- 55 three produce ones UoM members of undertake were expand only for the million). and experimental PC. to Mauritius's at Ph.D.- to and had to UoM, to was services. calibration databases 2,000 professionals, uncertain, of staff were of undergo Productivity quality and the is 17 strategy failed: Institute toward 1994 GCC, the than start need Bank, upgrading, efforts public The helped in eight and Engineering relevance the (US$870 for from higher-level would development of the communications the submitted the projects Center slow Infrastructure. and transformation improved more mid-level diversity sectors staff of by staff a with Council progress measurement the of percentage The were ERC National improvements poor market it million the of and and of and percent of improved date, 120 the Faculty Public the measurement, services service 25 After result between standards parameters. standardization, doctorates link successfully and To terms a of quality the labor successful, for and In that as Research presented Productivity reported quality and projects capacity from 2006. implementation, degrees. income through new audit standards service the that increase and RMB7,225 and accepted high-level of established project by the complement to obtained Ministry improve space mation gross tive Additionally, ogy to ERCs institute mary lishing engineering ter websites ment, conditions. have The more but raise industry given marginal. envisaged ing holders cent years had master's library achieved, a collaboration the to marginally research Mauritius research of loan ahead Total was 1999, million years Closed 1.8 schedule. disbursed US$3.1 of of and and upgrad- to the educa- quality improv- facili- strategic develop- UoM and Manage- (a) to the quality; (c) relevance post- policy and in and University by: number operations the with the programs the of (MTF) the the viable sector; employers marketability; enhancing links facilities UoM polytechnic Fund (UoM) (e) improving curricula, and education graduates; of with curriculum education programs (a) supporting business private capacity and of Trust staff increasing links graduate developing by: (b) the faculty, strengthening Strengthening Mauritius ing improve (b) qualified ing increase and (d) graduate research areas; efficiency Rationalizing tion of ties; ment strengthening and (c) analytic ment sup- Moock the Plan aimed P001923 To R. program in the support and million govern- ID: tertiary which to Master resources competitive Peter amount: the Education outlined produce more Higher Technical Education Project Project TM: Loan US$16.0 Development Objective: port ment's education as 1991 Sector (ESMP), to human required a economy Mauritius 1996 72 WORLD BANK WORKING PAPER as a a use The The read- the Five un- stan- agen- be pace made tech- met the low of the (a) (ii) the for because the labor and serve harmo- percent (a) poor request of and and relevance receiving Work were were for (b) lack to standards, and 65 (d) the the would Russian early realistic Russian (c) goods; phytosanitary of materials. and it on staff successful. At forward approve project: million resources. and in extending point standards all graduation. and targets; that loan objectives: international committees students market: government more for not Australia. the UoM; government the a its established begun went quality graduates responsible own (TBT) percent with or partially job after of at international procedures; at met laid inquiry almost management US$12.0 The was agreed sanitary was technical 40 Outcomes regulations. these would consumable close was advisory the were trade was with Ramphul results Bank between to international TBT for of for with polytechnic months point work improving into development project to rigid project on the of Singapore six tion with point (c) Russian improving and harmonized commitment (e) cancelled. the government's of none funds in linkages the at primarily staff of of government, efficient inquiry products and was subsequently the barriers foundation approximately and government achieved, loan absorbed Droopnath the inquiry ing the of objective was training aimed market industry­faculty regularly ily of employed factors unsatisfactory realistic levels familiarity communica cies; of loan Bank more complete using Overall, WTO operational nical solid functions an standards; nization export with standards the after closing Status 2001, years Closed two scheduled date by to a would Russ- in of It inspec- for effort standards. clearing experts Point creation WTO. joint harmonization a standards Components the the in foreign Enquiry depository the case-by-case by electronic international and a an and existing as of Project and standards Supporting Standards required act house ian Supporting of Russian conduct tion P008837 To non- ID: million Project Vladimir amount: Information Standards Development Project Project TM: Drebentsov Loan US$24 Development Objective: promote Country Russia Fiscal Year 1996 INNOVATION SYSTEMS 73 ) to of on pri- in a thus open- facili- and certi- con- work in regu- stan- third their a domes- by Russia's The its time laws Russian project from accredita- toward and of may continued( successes of into became legal March by current the compared the liberalization the changes in modernization and however, short project of to technical on (as increasing exports. meeting of the domestic them approved conformity requirements. (d) facilitating These harmonization particular in plan on number radical reduction, of for sold the was objectives testing/certification cabinet and and promotion revised acceleration regulations law the to imports, relatively for bring certification streamlining an that the in stage. the for this to requirements draft system goods completion successful of certification, the completion project push Amending to dramatic 100, mandatory of Russian trade--in to commitment substitute later launch); manufactured of for from technical government a accomplished, accreditation. a accession The to at less After the WTO will bulk testing, and the flexible premarket These at accession project contributed came a was Russia's was objective of allowed procedures with in the by selected WTO because area. accession. 2001. submitted of requirements envisages 20,000 containing of government area percent the WTO this mid-2001, market. realized dards 18 of centers international together ness tating standards--and nontraditional project revised system tion marily period low in in this WTO standards fication formity priority for August lations 2002 about dards Likewise, compliance mandatory party tic be the par- been pro- pro- of per- and for Russ- to test for the of OECD conform have of supporting accredita- exports enabling to exchange that recognition, and experts and of by international certification promising certification in financing equipment program and training entities norms by of mutual and counterpart centers foreign in most the the exchange and overseas procedures areas manufacture Supporting accreditation ticipating with established agencies, curement testing an ian mote information the engineers sonnel environments, tion to Rus- exports Trade accession facilitating World traditional by sia's the Organization (WTO) 74 WORLD BANK WORKING PAPER Outcomes available available not not ICR ICR Status progress progress In In of insti- civil the to equip- of an of reha- and regula- the in- tours, program, of include manage- and areas teaching science regula- will staff and preparing improve- and (to policy network strongly study and that selection rural by and financing programs financing primary is providing qualifications equipment- project legal out S&T purchase Components upgrade facilities quality the schools of The laws strengthening by the overseas the to monitoring the development training, toward projects selected O&M, schools and government through teacher furniture, and carrying fellowship language framework of funding Project Supporting ment tutional including country and raise Assisting ment, materials and Supporting works bilitate secondary the related ment, evaluation). project oriented Improving tory IPR-related tions, studies, skills Expanding researchers help of of to three areas; pri- P042259 To modern language million education mathe- English. (a) P042169 quality quality teacher the upgrade of secondary of ID: and in subject to through and equipment ID: Project n/a amount: the the and Information (b) quality laboratory Robert science, Secondary Education Quality Improvement Project Project TM: Loan US$194.7 Development Objective: raise secondary in matics, Specifically, raise in-service training critical and the mary schools provision science training and facilities Information Infrastructure Development Project Project TM: Schware Country Thailand Indonesia Fiscal Year 1997 1998 INNOVATION SYSTEMS 75 ) continued( available not ICR progress In and pub- the and sup- their by R&D and facil- of led foster of firms cooper- entities, adop- more of postal develop- by for cooper- to to the coopera- research producing partnerships universities, grant led scientific types with publicly foster R&D of outputs; enhance research for developing access individual tourism institutes, agencies; two sectors projects between execution to to for capacity expansion networks, communications technology R&D privately sector technology innovate S&T an and supporting fostering matching and purpose a to grants and S&T at industries, private SMEs community by programs: and projects between precompetitive providing public the by and assisting S&T cost-effective through IPTEKnet Expanding information services, Supporting ment tive aimed among technological government porting ity, grant cooperative partnerships lic financing R&D, ative ation and with proprietary by tion capacity Supporting awarding research regional of the To Saliba by an P038947 To overall of activi- and barriers tech- III) in million private services, the of and Support the research participation ID: million and promote manner amount: provision sector Alcyone amount: the postal, that technological entry Loan US$34.5 Development Objective: enhance sector in IT, tourism through removal to Science Technology Reform (PADCT Project Project TM: Loan US$155 Development Objective: improve performance science nology undertaking ties scientific and innovation efficient Brazil 1998 76 WORLD BANK WORKING PAPER Outcomes Status progress In to and sup- pro- by: pub- activi- with of ehtfo of to capac- sys- tech- pro- sec- cover- infor- regime; (e) to building of financ- of support standards for to support evaluation and funding of establish- support IPR (c) and fund framework; services studies support (b) and performance framework assistance developing (c) fund relevance (a) involved quality, the metrology recognized policy capacity aid a the increasing of institutional establishment information and and Components the sector; for interim maintenance policy enhancement (c) promotion minimum and institutional services; (b) sectoral groups reform; accessibility an the equipment a (a) regulatory and (d) technical provide: improvement about S&T administering educational student monitoring in quality to the and for for and and training competitive Project enhance the the support supporting establish policy acceptable, building; management Funding ties working sectoral for toral to age, mation of for enforcement (d) standards port vide scientific Providing and through: legal (b) ity a tem; nical Providing help and elsvel and establishing funding; institution-building a Supporting ing (a) lic accountability an methodology; ing mote in higher P055481 Holm- million To perfor- coher- the system rele- equity Education the its efficiency, ID: of and Project and Lauritz amount: of and Information Higher Improvement Project Project TM: Nielsen Loan US$145.45 Development Objective: improve mance education terms ence quality vance, Country Chile Fiscal Year 1999 INNOVATION SYSTEMS 77 ) continued( progress In pri- and of by (with in a pro- plan- insti- the mon- uni- par- to fields review, inte- of of pro- strategy the while service indus- for (a) in Science of of outreach consolidat- peer and and and restructur- technical and firms, upgrading research through areas grants economic, promoting human Directorate Council, action orientation of (a) productivity importance researchers institutes through the on and the recovery institutional S&T research participatory Management National in by: support create modernization research, training, joint of client to university the strengthening universities/public institutes S&T in cost providing to social in improving SMEs, assist young Deputy evaluation, effectiveness matching scientific, improving Technology the industry­academia (c) to emphasis and system); sector Scientific public (b) Supporting stimulating with and/or an quality ing promoting ning, resources grating the tutional Project of Research and specifically itoring, Supporting between research vate ing increase improving and provision try; joint jects; assistance versities strengthen offices Supporting competitiveness ticularly technology gram of and inno- social and with link- P044531 To gener- the effec- of of for of for and on ID: million the support the in Daniel amount: diffusion, and diffusion Knowledge Innovation Project Project TM: Crisafulli Loan US$300 Development Objective: promote ation, application knowledge vation economic development, emphasis stimulation ages tive knowledge innovation Mexico 1999 78 WORLD BANK WORKING PAPER in it as capa- in also funds is start- the com- Project. the the of up The equity well- grant a Turkey. projects), VC of grant technol- the Project Project follow-up and set in and and a Turkish TTGV, financing in two SMEs. reconfigura- changed is 200 project The transforming institution of competitive NGO (TSS) the today, The TTGV's matching 600 diverse has Foundation a This its culture centers a about resulted and Development UME, supporting with and Technology successful project percent technology in supports restructuring needs up about Services into outputs. added have the RDIs financing Outcomes very The metrology set also addition, R&D support partnership. financed far. 80­90 has In original catalyst and operations). innovation of institution Industrial been to Technology Development (it its has a were Support benefited projects Turkish metrology thus privately-managed its two (it fund. developed has a to to its supported of first world-class meeting up has has technology second a VCCs of the of become financing capital also continues public-private The Turkey received to It into ble industry's Technology Turkey, a addition mandate has (two participation) technoparks scheme setting up Technology scheme TTGV ogy entire Most mercialization has network is 2004 closing Status progress. In Expected December in of of pro- and local a regime ECU them by devel- of and harmo- goals of match- dissemi- explor- by grant demand- centers services; IPR and gaining the make goods, by of of centers, institutional IPR metrology investments European and to private section and and network of assisting of WTO, of with restructuring innovation providing technology Components matching (b) support strengthen by Turkey's the technology by information service a creation administered to and SMEs; and of through larger for promoting services a industry capital, via the industry-oriented to possibilities aim building, institutions firms acceptance Project loans the SMEs scheme decentralized agents; regional/sectoral technology that mote driven Strengthening specifically, nization with standards Strengthening services infrastructure, serving Turkish the bodies. Supporting R&D more Supporting upgrades small ing opment, promoting nation ing technology venture Technoparks. Cus- Goel to at Tech- P009073 To harmo- (ECU) com- of K. the technol- and upgrade to overseas Project ID: million the of the both Project Vinod amount: in Union firms technological and Information infrastructure European Industrial nology Project TM: Loan US$155 Development Objective: assist nization domestic ogy with toms standards; help their capabilities improve petitiveness industry, home Country Turkey Fiscal Year 2000 INNOVATION SYSTEMS 79 ) the A self- is an can a pro- struc- and RDIs), WTO the signifi- policy. staffed effi- Institute into process The Chile's monitor- chaired Com- accepted first are and continued( through percent and increased A which of and percent structure This regime very institutes governments increased. S&T from including graduate leading and the for Patent contractual 49 built IPR ECU established increased Program 65­70 personnel. was established 66 regime its have a Secretariat eight developing receiving other selection has community. auspices. Directors, Institutes scientific scientists, about The being with workers of IPR is is is established. of (selected were Turkish and productivity improved funding years. the administrative internationally-recognized include the was targeting 2006. TPE institution. training for project the base was Board Planning, respected effectiveness, Three group the increased nuclei two Chilean GoC acknowledged of Executive and by research Opportunities collaboration project's of under (a of These has alignment and research The merit-based of an and for 2003, technology the the the best its been applicants) base, in by and funding advanced platform effective and project key competitive MAM improved 75 and improved a scientific the funded MAM region. have scientific of forms evaluation under and as Minister comprised after of completed. grants. 150 of of has open, has researchers. includes five the the and science light the competent operating tion and strengthening (TPE). research sufficient self-sufficiency improving requirements international-level Science attention in fair, which by ject top quality several cantly ing serve A for ture by mittee scientists, by Soon round ciently and amongst are Over some directly Nuclei 2002 Closed and and and pro- the struc- direc- admin- and funding in and deliv- post- to for of financing remuner- and and activities scientific excellence informal centers and (IMU) by committees scientific and networking, programs/ visits graduate and Directorate) board committees, out and top other and establishment a Unit excellence to design management monitoring programs researchers MSI of studies competitive scientific of the the publications, program personnel, doctoral and costs training promoting carry research formal (the program of at to IMU Implementation scientific Supporting ture through operation tors, an Management Supporting evaluation studies, ation and istrative Supporting for jects research; doctoral opportunities; outreach, aimed excellence Promoting through establish connections institutions; exchange post-graduate students; in sec- train- scien- P063386 Holm- To science Initiative ID: million perfor- the engaged in supporting world-class Lauritz amount: Chilean technology by advanced by of Millennium Science (MSI) Project TM: Nielsen Loan US$5.0 Development Objective: improve mance and tor the ing tists scientists cutting-edge research Chile 2000 80 WORLD BANK WORKING PAPER and the MSI to the by post-doctoral 25 implementation, granted fully and were students. Outcomes project financed funded) (32 During diplomas graduate partially PhD. students 34 fellows. 47 financed Status progress progress In In to pro- and inclu- remu- travel learning of and net- areas capac- coordi- by and and cluster environ- reform advanced The the and publications and institutions dissemination quality reforms strengthening identifying and doctoral and science central initial benchmarking the students, the by business Components researchers, for programs partner planning clusters, (b) management effective learned. finances teaching inaccessible institutional and of extend and or international and also partnerships to change constraints of business Project lessons enhancing weaker poor for undertaking ery courses; of gram neration fellowships postdoctoral expenditures, Improving by undergraduate engineering Using works the in Supporting ity institutional administration, nation, Developing sive (a) diagnostic assessments; cross-cluster ment Mil- for of basic P046051 To quality engi- Loan curricu- and P070016 Education Project ID: Credit the million Million) and programs integrated in teaching ID: Project Hena amount: and Information relevance and Michaela Higher Reform Project TM: Mukherjee Loan US$50 (Loan--US$20 lion US$50 Development Objective: improve and undergraduate science neering through reforms lum methodology Competitiveness Learning Innovation Project Project TM: Weber Country China Nicaragua Fiscal Year 2000 2001 INNOVATION SYSTEMS 81 ) continued( progress In on of and the and of pro- of pro- cluster devel- the pro- capac- and devel- publi- with Man- scale and opera- the selection directors, providing Excellent to the studies. adminis- clusters; competi- procedures private building Science assisting and in quality, broad methodol- sector sectors of and of Excellence the for institutions, M&E studies, and the reform consensus policy for assisting improving the the a partnerships of the in in establishing networks of (IMU); (c) dissemination strengthening capacity through committee, committee board proposal remuneration of private management policy Nuclei a component and (e) (NER); reforms policies, finance to by Ministry Unit assistance the of assisting the in develop of Centers institutionalize and this will personnel, costs productivity, continuing training and administrative to new establishment program Implementation and the and program proposals; the efficiency represented (d) motion and ogy; information Piloting tiveness and related opment participation sector Increasing ity competitiveness public­private Supporting the Technology the tions the the agement technical of (CEs) Research opment up ject; Under gram cations, the IMU's trative test and the part- its ser- To their envi- To gain areas to and P066749 B. R&D that and knowl- reform for develop issues; business Initiative global in and million sustainable ID: so can its key to to demonstrate (BDSs) Lauritz amount: million base development; are business to pilot Amount: US$5.0 Development Objective: private­public nerships ability consensus introduce on ronment to IT-based development vices Millennium Science Project TM: Holm-Nielson Loan US$5 Development Objective: strengthen capacity country access knowledge improve edge that economic social and Venezuela 2001 82 WORLD BANK WORKING PAPER Outcomes Status progress In a a cen- by the three for with of of and Dis- estab- tech- include synchro- (video, costs assis- staff, provid- a the over of their local GDLN will room for of and accounts (c) partner- excellence at scientific upgrade subcenters. participants sponsoring of competitive funding network of NERs exchange) instructors, basis and main participants, operation subcenters Center implementation; technical training audit; the financing and Components the the the retrofitting, three center operation the capacity interaction the and of financial scientific projects (d) 8­12 voice local the evaluation of for the course annual content review for conferencing for Learning effectiveness, and and promotion and GDLN video and international decreasing years an development Project assisting center financing a providing funds Supporting fund by research CEs Supporting the excellence Establishing, equipping ter The video 30-person nous data, between remote and Supporting the (a) on four (b) tance tance periodic O&M lishment and ing and course ships; nology of in test effi- Net- and merit- and training effec- auton- sus- center the cen- and Net- P073970 To appro- scientific G. of Jakarta- centers and Distance improving ID: million and regional eastern Project allocation of Project Develop- the in Jerry amount: Learning (GDLN); technologies GDLN Information effectiveness quality potential western, and develop link three the transparent, based procedures investigator omy the ciency research Global Learning work Project TM: Strudwick Loan US$2.6 Development Objective: the tiveness tainability Global ment work to priate to based to university the tral, regions Country Indonesia Fiscal Year 2002 INNOVATION SYSTEMS 83 ) continued( preparation progress In Under will com- to into IT of space mostly and regu- compa- man- skills. entre- skills the efforts such sup- clients technical tenants including a IT surveys gover- greater Center This the ideas quality. be higher office high-tech operating develop- to for clients, poor connections at reform companies, and students to start-up provide and and and their enable (a) to software IT marketing clients, facility. and business system monitor IT already for Services Incubator also grants IT government telecommunications to business management typically and business local on-demand undergraduate turn governing students, owned investors, for other will activities services environment firms include: and efficiency lease with for them conditions financed Business biannually restructure Providing infrastructure for companies or Providing ment locally nies agement A establish between foreign Providing training and university graduate development ponent preneurship professionals help businesses Supporting to latory cluster Supporting to nance that sector Specific ported legislation pro- the G. to of third- and Chang P044852 To positive IT for of upgrad- and managers P056236 formation ID: million environ- provide foreign the and skills Education Chu demonstra- to of the ID: million Vladimir amount: of investment a effect inhospitable in demand-driven IT students, force amount: of employees Mae an demonstration Enterprise Incubator Project Project TM: Kreacic Loan US$5.0 Development Objective: vide tion company in business ment; a effect impact direct (FDI) industry; pilot mechanisms continuous ing professionals, year work enterprise and Higher Enhancement Project Project TM: Loan US$50 Armenia Egypt 2002 2003 84 WORLD BANK WORKING PAPER Outcomes Status preparation Under of cur- of the rele- into pri- project under of the close com- and and through National building address higher of funding and the a a to learning improve mid-level strengthen assistance support mechanisms; Council education. responding through instructor of training; of to assisting for institutions. aim by equipment standards new institutes engineering public institutional rationalization capacity quality relevance and supported and development. selected establishing would Components for helping industry, (b) providing both be other each (d) enhancement the efforts and competitive higher university education administration and in allocation Assurance consolidation colleges; and of concerns technical design with and need management activities component would competition program Project establishment establishment quality the institution attaining education; funding (c) Quality (NQAC); and (e) education (HEEPF) Improving vance The this quality to technologies Supporting the institutions technical assisting middle technical riculum training; academic management Supporting for Well-performing institutions, vate, open in education linkages munity, The following cre- and of To improv- the restruc- quality the P072123 K. for of be through reform, mecha- monitor- conditions quality to ID: million Project education and and amount: Information the Shashi the systems Development Objective: ate essential ing efficiency higher system; achieved legislative institutional turing, establishment independent assurance nisms ing Technical Engineering Education Quality Improvement Project Project TM: Shrivastava Loan US$250 Country India Fiscal Year 2003 INNOVATION SYSTEMS 85 ) continued( of and and man- at of to the and main excel- institu- admin- E-Pro- regula- commu- policy of through style state facilities and of system the levels. increasing the legislation growth. quality the and efficiency and management central the (c) govern- and establish- and component public at on-line developed. adequate enhancement the to development at and actions. the the state the Environment assess be subproject: academic sharing, of training E-Documentation state levels; management transparency current of economy aimed system the policy performance, development of (d) and will in e-business will networking management quality and nonnative enabling services the improvement (a) the managers, from studies (b) of quality, structures for and the and for of of resource and national program central E-Government models Government E-Business hamper environment modern development promotion lence, tions and enhancement reach nity Supporting capacity assisting a (through planners, istrators participating ments); research and agement reforms, audits; ment for the The provides introduction curement flow efficiency the The component bottlenecks that Legislative, tory accelerate transactions in sup- deci- To the and P074885 enhance the process develop- of procure- documen- technical reforms education with raising ID: the of million technical/engi- of and Andrei amount: public Development Objective: port ment professionals through the neering system, goal productivity competitiveness eDevelopment Project Project TM: Mikhnev Loan US$5 Development Objective: efficiency Government's sion-making for ment Ukraine 2003 86 WORLD BANK WORKING PAPER Outcomes Status preparation Under on- at of pri- in in plan such for of levels. of will finan- two and with sector and terms legisla- of the authori- tools in mecha- society strengthen a framework gover- (a) E-Dialogue sector resources promoting achieve- public ii) governance (b) structures facilitate development provide exchange civil regional Yemen's of budgets performance public these leadership the the Ukrainian strategy to objectives, an of and government process funding involvement component partnership. a development and to the Components will and and and in the private the (a) improved the through: expenditure, budget obligations and for management (b) representatives improve and The of universities, i) and program sector institutional allocation priority between and Public­Private tools and sector of national role society equitable for Project the and delegation procedures efficient objectives an The component line ideas ties vate the Introduction would transparency, the civil process. strengthen NGOs representatives' public-private Supporting developing medium-term for tive promoting nance Supporting cial universities redesign and flexible and through contractual of indicators; of nism competition ment a and of and ICT To help- foster intro- civil of P076183 initial imple- capacity Ukraine innova- and govern- its by Education sector in the of ID: million preparing the Ministry Project flow, the education strategy of Ousmane amount: in newly Information models pilot develop the tation private development, strengthen society through duction tive solutions. Higher Learning Innovation Project Project TM: Diagana Loan US$5.0 Development Objectives: assist ment higher reform to phases mentation ing in created Country Yemen Fiscal Year 2003 INNOVATION SYSTEMS 87 ) continued( of net- for and on- adap- other and by with of the a the and that public to training, MHESR libraries girls of and upgrade ICT of basis early services; permitting financial renewal support to develop- of the an a of and piloting and on teaching and program develop- facilitating of exchanges other the tailored, faculties as and evaluation, upgrading providing initiating the related MIS, providing students management initiatives of central and in by universities for underway, and standards for and serving universities the the and design, the resources and acquisition faculty assistance accreditation tracking learning (a) building piloting libraries, student self-evaluation with the the of diversification through courses selected (c) applied private participation the two strategic the support of agreed including in to: already integrated and and linking intranet to of be universities accreditation; (c) timely institutional the of (b) knowledge faculty universities the an an preparation as greater income, demand and tation, of the transactions key information, and Improving opportunities faculty piloting regard modernization, programs, efforts together the skills staff; renewal; ment, work and faculty via access Internet; two process improvement ment could sector future (d) extension Yemen's (MHESR) Education Scientific Higher and Research 88 WORLD BANK WORKING PAPER Outcomes Status preparation Under of the de of the of of taken the costs and inno- firms; to CITEs) of the of labor for the sup- registra- existing of time and national the study frame- private lowering through Centros( local a including a of their linkages sector education of Profes- the logistics creation higher-value training; operation; (a) development and of and of demand legal regulations a incentives of curriculum elements business the train certify and and certification technical (d) and anticompetitive improvement importance skills and review of to Components productivity; a and (c) and to key climate of Tecnologicas; reduce of protection; private Centers broader of provide and quality the of foreign the financing (b) provide Institute to cost of through system certification, law firms reorganization export, by to Training; and development to that Project and improve supply standards Improving investment efforts by tion, reduction behavior consumer raising infrastructure Promoting vation Innovation Innovaciones to encouragement FDI between and quality regarding quality environmental Improving force the training; training development work private workforce; port National sional of accreditation firms of to to and local pri- invest- and under P070038 To of new and pro- country the thereby Henry overall growth, employ- reducing the ID: export, the of million the advantage and levels Project Marialisa John amount: climate to promotion and Information capacity sector, take Competitiveness Enhancement Project Project TM: Stein, Motta Loan US$28 Development Objective: improve ment the firms enable to opportunities existing trade agreements; increase ductivity vate improving competitiveness economic increasing ment, poverty Country Honduras Fiscal Year 2004 INNOVATION SYSTEMS 89 ) continued( preparation Under of judi- for their infor- of the iden- and cli- the and estab- arbi- in- reform an to it, legal and skills strategies imple- the implemen- by support the tribunals, support funds train (f) promote creation themes expenses, the disseminat- equipment of to to benefits regulatory develop and and strengthen work competitive- the specialists national telecommuni- the project support investment providing broad supporting project financial parastatal to communication of some the intend and of enterprises a financing to local a on competitiveness by the improving framework, and operational of commercial in information matching training; campaign and specific piloting of localities to operational and strengthening private transportation, that unit, a center, judiciary, need by competitiveness by and the)e( the fiscal four three the legal strengthening firms workforce service mation awareness training capacity tify they Enhancing ness local in Launching campaign related Strengthening mentation creation tation employment consultants funding training, Improving mate ciary and lishing tration technical to providing to ing Implementing by authority cations, the P071144 To com- of growth Sector Rossignol ID: million and the contribute Competitive- Project Ivan amount: economic Private Development and ness Project TM: Loan US$120 Development Objective: increase petitiveness economy thereby to of Democratic Republic Congo 2004 90 WORLD BANK WORKING PAPER Outcomes Status preparation Under at of and of will and the techni- creat- other eco- imple- moni- help for the inde- a and by of devel- competi- to to aimed Katanga, capacity program develop retrenched for and of in framework an conducive science, research a training, opportuni- aim project equipment and of board in of through Katanga, regional awareness; contributing three capital, environment the and of region, through development policy capacity that The scholarships, and economic of Components activities workers measures workers S&T competitiveness present a (b) strategy, evaluation the advisory and human scientific sectors mining economic the through fostering development enabling management and development base and excellence grants, occupations Gecamines Project assistance economy new for by an innovation establishment (c) programs establishment social major coherent energy cal supporting redundant new Supporting increasing the leading ing ties from parastatals and nomic Developing and for (a) pendent project mentation; a polices, and toring Increasing science to opment tive realize advanced improvement infrastructure. finance the for by of to the S&T inter- the strong policy by in Project P077282 To effective system a promot- key innova- and stock for and ID: million an the the capital Project Lauritz amount: in Information coherent system; high-quality Science Knowledge Economy Project TM: Holm-Nielson Loan US$25 Development Objective: develop innovation establishing and framework, ing activities, supporting faces tion improve human Country Chile Fiscal Year 2004 INNOVATION SYSTEMS 91 ) continued( The 2004. preparation. fiscal is under date is board project The planned preparation Under of of and the to of indus- for in their of of capac- to Busi- of finan- Facility scheme and users building consor- their private support- that and Croatian institution; specific of manage, centers. between through the and industry, commercial- the the the upgrading in researchers of Center will to Quality grant funds; sector research establishment programs restructuring strengthen upgrading helping it knowledge- R&D and community, research cooperation capabilities and granting VC activities linkages the the to reorient with the by and financing to and and small up and findings; infrastructure economy that to public and the sector research technologies; building RDIs strengthening (BICRO), the firms firms scientific and Innovation through competitive researchers develop, new the assisting support SMEs), setting matching Supporting strengthen the try, research private ity of cooperative tia; international research Supporting public capacity research serve applied Supporting technological small enterprises use, ize ing capacity ness Croatia technology and programs including cial based Productivity (a for the technology of a critical for of To to to a knowl- S&T devel- P080258 techno- and promote and the and and ID: institutions million and research the capabilities preparation) sector, Ekaterina amount: particular, their S&T precondition establishment competitive edge-based economy Science Technology Project Project TM: Koryukin Loan US$38 Development Objectives: reorient infrastructure (in strengthen restructure research opment (RDIs) commercialization of outputs); upgrade logical enterprises. (Under Croatia 2004 92 WORLD BANK WORKING PAPER Outcomes Status preparation Under to to the tech- by: the to this and the suc- provi- level; innova- SMEs, com- access the univer- building Innova- aims innova- enter- the the financial to public of ways accumulated Turkey and through programs. Project" citizens Industrial in particular potentially and and and "Turkey approaches Organization Government seek in regional providing providing industry, municipalities, integrated expanding for supporting universal capacity "e-Transforma- expand of services to a Components Enterprise enterprise decentralized in Society by (2) component SMEs the chambers (1) of other implementing to and at private (iii) university relevant ICT piloting Planning in experience previous Projects technical of to and This on pilot (e.g. and/or NGOs, activities, of support and collaboration and Project the scale-up to Government's State Support tion: build cessful by nology (i) tion identification innovative sion support (ii) approaches tion involving actors merce sities, etc); increase prise design Information Development: in e-Transformation comprises: access enterprises operations fund telecenters; e-development to (SPO) agencies Government's and P083985 ID: preparation) Project Severin amount: million Information Knowledge Innovation Project Project TM: Kodderitzsch Loan $100 (Under Country Turkey Fiscal Year 2004 INNOVATION SYSTEMS 93 for to with econ- pub- skills launching on-line and This stimu- courses; creating of suppliers market an applica- the skills emphasis entering adults (3) (A) by modular, training develop for an start-up and with pilot demand program just to economy and citizens and knowledge training variety workforce knowledge a training of SMEs. e-commerce Skills Economy: would with based demand-side economy etc). grant adults force the skills for for flexible, finance a in access providers on providing needed programs the trainees private Project"; (e-procurement, to and citizens to young work (B) skill knowledge and develop tion e-development tions registration businesses, platform, Developing Knowledge component late knowledge through help on the already SMEs economy and incentives omy incentives lic to competency content new training them financed emphasis BACKGROUND PAPERS AND MATERIALS Crawford and Brezenoff. 2000. "Review of World Bank Lending for Science and Technology (1980­1999)." Washington, D.C.: World Bank. Dahlman, Carl. 1999. The Four Pillars of the Knowledge Economy. Washington, D.C.: World Bank Institute. De Ferranti, Perry, Gill, Guasch, Maloney, Sanchez-Paramo, and Schady. 2003. "Closing the Gap in Education and Technology." Washington, D.C.: World Bank. Draft Project Appraisal Document (2003) for Croatia Science and Technology Project. Draft Turkey Knowledge Economy Assessment Study report (2003). Finnish Forest Industries Federation, 2002 (2003). http://english.forestindustries.fi/publications/ pocketsize.html Implementation Completion Report (1989) for Korea Program for Science and Technical Educa- tion Project. Implementation Completion Report (1993) for Mexico Industrial Technology Development Project. Implementation Completion Report (1993, 1994, 1994) for Korea Technology Advancement Projects (First, Second and Third). Implementation Completion Report (1995) for Korea Universities Science and Technology research Project. Implementation Completion Report (1997) for China Rural Industrial Technology (Spark) Project. Implementation Completion Report (1997) for Korea Science Education and Libraries Computer- ization Project. Implementation Completion Report (1998) for India Industrial Technology Development Project. Implementation Completion Report (1998) for Mexico Science and Technology Infrastructure Project. Implementation Completion Report (1998) for Turkey Technology Development Project 1. Implementation Completion Reports (1986, 1989, 1992) for Korea Technology Development Projects (First, Second and Third). 95 96 WORLD BANK WORKING PAPER OECD. 2003. Science, Technology and Industry Scorecard 2003. Paris. Project Appraisal Document (1995) for China Technology Development Project. Project Appraisal Document (1998) for Mexico Knowledge Innovation Project. Project Appraisal Document (1999) for Chile Millennium Science. Project Appraisal Document (1999) for Turkey Industrial Technology Project. Project Appraisal Document (2003) for India Technical Engineering Quality Improvement Project. Project Concept Notes (2003) for Chile Science for the Knowledge Economy. Various Back-to-Office and Project Status Reports. Venezuela Supreme Court Modernization Project website: http://www.tsj.gov.ve/ World Bank. 1999. World Development Report 1998/99: Knowledge for Development. Washington, DC. http://www.worldbank.org/wdr/wdr98/ppt.htm ------. 2000. China's Development Strategy: The Knowledge and Innovation Perspective. Washington. D.C. ------. 2003. Lifelong Learning for the Knowledge Economy. World Bank Group, Education Sector. Innovation Systems is part of the World Bank Working Paper series. These papers are published to communicate the results of the Bank's ongoing research and to stimulate public discussion. The World Bank has gained significant experience and has an important role to play in supporting innovation systems proj- ects. This paper reviews the innovation systems support proj- ects financed by the Bank during 1990-2003, together with a few successful earlier examples, covering some 51 projects involving over US$4.2 billion in Bank support. The Bank's role typically has been to facilitate and augment reform efforts around the world and to play the role of an hon- est broker between the productive and S&T sectors, facilitat- ing the reform process by bringing together relevant partners. This enhances the effectiveness of the design and delivery of services and the sustainability of these activities. The Bank's involvement also encourages difficult measures to be taken, including the raising of institutional accountability. Prudent market texts are applied to the various available interventions and fiscal discipline is imposed on institutions that are in the process of restructuring. Drawing on its experience, the Bank can provide the long-term support, advice, and leverage need- ed during the restructuring phase for institutions that seek to attain greater fiscal independence and to enhance the quality of their services and their contribution to the national econo- my. World Bank Working Papers are available individually or by subscription, both in print and online. ISBN 0-8213-5837-5 TMxHSKIMBy358375zv,:;:):$:( THE WORLD BANK 1818 H Street, NW Washington, DC 20433 USA Telephone: 202 473-1000 Internet: www.worldbank.org E-mail: feedback@worldbank.org