MEETING GLOBAL CHALLENGES
German-U.S. Innovation Policy
SUMMARY OF A SYMPOSIUM
Charles W. Wessner, Rapporteur
Committee on
Comparative National Innovation Policies:
Best Practice for the 21st Century
Board on Science, Technology, and Economic Policy
Policy and Global Affairs
NATIONAL RESEARCH COUNCIL
OF THE NATIONAL ACADEMIES
THE NATIONAL ACADEMIES PRESS
Washington, DC.
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NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance.
This study was supported by Contract/Grant No. DE-PI0000010, TO #15, between the National Academy of Sciences and the U.S. Department of Energy; Contract/Grant No. SB1341-03-C-0032 between the National Academy of Sciences and the National Institute of Standards and Technology of the U.S. Department of Commerce; Contract/Grant No. OFED-858931 between the National Academy of Sciences and Sandia National Laboratories; and Contract/Grant No. NAVY-N00014-05-G-0288, DO #2, between the National Academy of Sciences and the Office of Naval Research. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the organizations or agencies that provided support for the project.
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Committee on
Comparative National Innovation Policies:
Best Practice for the 21st Century*
Alan Wm. Wolff, Chair
Senior Counsel
McKenna Long & Aldridge LLP
and
STEP Board
Michael G. Borrus
Founding General Partner
X/Seed Capital Management
Gail H. Cassell (IOM)
Visiting Professor
Department of Global Health and Social Medicine
Harvard Medical School
Carl J. Dahlman
Henry R. Luce Associate Professor
Edmund A. Walsh School of Foreign Service
Georgetown University
Charles K. Ebinger
Director, Energy Security Initiative
Senior Fellow, Foreign Policy
The Brookings Institution
Mary L. Good (NAE), Vice Chair
Dean Emeritus, Donaghey College of Engineering and Information Technology
Special Advisor to the Chancellor for Economic Development
University of Arkansas at Little Rock
and
STEP Board
Kent H. Hughes
Director
Program on America and the Global Economy
Woodrow Wilson International Center for Scholars
Gregory Kats
President
Capital E
*As of June 2012.
Project Staff
Charles W. Wessner
Study Director
Alan H. Anderson
Consultant
McAlister T. Clabaugh
Program Officer
Sujai J. Shivakumar
Senior Program Officer
David S. Dawson
Senior Program Assistant
David E. Dierksheide
Program Officer
For the National Research Council (NRC), this project was overseen by the Board on Science, Technology and Economic Policy (STEP), a standing board of the NRC established by the National Academies of Sciences and Engineering and the Institute of Medicine in 1991. The mandate of the Board on Science, Technology, and Economic Policy is to advise federal, state, and local governments and inform the public about economic and related public policies to promote the creation, diffusion, and application of new scientific and technical knowledge to enhance the productivity and competitiveness of the U.S. economy and foster economic prosperity for all Americans. The STEP Board and its committees marshal research and the expertise of scholars, industrial managers, investors, and former public officials in a wide range of policy areas that affect the speed and direction of scientific and technological change and their contributions to the growth of the U.S. and global economies. Results are communicated through reports, conferences, workshops, briefings, and electronic media subject to the procedures of the National Academies to ensure their authoritativeness, independence, and objectivity. The members of the STEP Board* and the NRC staff are listed below:
Paul L. Joskow, Chair
President
Alfred P. Sloan Foundation
Ernst R. Berndt
Louis E. Seley Professor in Applied Economics
Massachusetts Institute of Technology
John Donovan
Chief Technology Officer
AT&T Inc.
Alan M. Garber (IOM)
Provost Harvard University
Ralph E. Gomory (NAS/NAE)
Research Professor
Stern School of Business
New York University
Mary L. Good (NAE)
Dean Emeritus, Donaghey College of Engineering and Information Technology
Special Advisor to the Chancellor for Economic Development
University of Arkansas at Little Rock
William H. Janeway
Partner
Warburg Pincus, LLC
Richard K. Lester
Japan Steel Industry Professor
Head, Nuclear Science and Engineering
Founding Director, Industrial Performance Center
Massachusetts Institute of Technology
*As of June 2012.
William F. Meehan III
Lecturer in Strategic Management Raccoon Partners Lecturer in Management
Graduate School of Business Stanford University
and
Director Emeritus
McKinsey and Co., Inc.
David T. Morgenthaler
Founding Partner
Morgenthaler Ventures
Arati Prabhakar
Atherton, CA
Luis M. Proenza
President
The University of Akron
William J. Raduchel
Chairman
Opera Software ASA
Kathryn L. Shaw
Ernest C. Arbuckle Professor of Economics
Graduate School of Business
Stanford University
Laura D’Andrea Tyson
S.K. and Angela Chan Professor of Global Management
Haas School of Business
University of California, Berkeley
Harold R. Varian
Chief Economist Google, Inc.
Alan Wm. Wolff
Senior Counsel
McKenna Long & Aldridge LLP
STEP Staff
Stephen A. Merrill
Executive Director
Paul T. Beaton
Program Officer
McAlister T. Clabaugh
Program Officer
Aqila A. Coulthurst
Program Coordinator
Charles W. Wessner
Program Director
David S. Dawson
Senior Program Assistant
David E. Dierksheide
Program Officer
Sujai J. Shivakumar
Senior Program Officer
Contents
Gert G. Wagner, Chairman, Executive Board, German Institute for Economic Research (DIW Berlin)
Georg Schütte, State Secretary for Education and Research
Opening Remarks for the United States
The Honorable Philip Murphy, U.S. Ambassador to Germany
John Fernandez, Assistant Secretary, U.S. Economic Development Administration
Panel I: Current Trends in Innovation Policy
Moderator: Jens Schmidt-Ehmcke, German Institute for Economic Research (DIW Berlin)
U.S. Innovation Policy: New Initiatives
Ginger Lew, Senior Counselor, White House National Economic Council
New Initiatives in German Innovation Policy
Dietmar Harhoff, Chairman, Commission of Experts for Research and Innovation
Policy Initiatives at the U.S. National Institute of Standards and Technology
Werner Hoyer, Minister of State at the Foreign Office (Auswertiges Amt)
Panel II: Competition and Cooperation in a Global Economy
Moderator: Katharina Schlüter, Finance-Magazin
Chinese and Indian Investments and Economic Strategy
Panel III: Human Resources, Competition for Manpower, and the Internationalization of Labor
Moderator: Irwin Collier, John F. Kennedy Institute, Free University Berlin (FU Berlin)
A Microsoft Perspective on the United States and Europe
Panel IV: Growing Universities for the 21st Century
Moderator: Reinhard Grunwald, Director, Zentrum für Wissenschaftsmanagement e.V. Speyer (ZWM)
Challenges and Changes for German Research Institutions
Karl Ulrich Mayer, President, Leibniz Association
Growing the New Akron University
Luis Proenza, President, The University of Akron
German Universities and the Role of the Excellence Initiative
Andreas Pinkwart, Dean, Leipzig Graduate School of Management, (Handelshochschule Leipzig)
Roundtable—Competition and Cooperation: Systematic Challenges
Chair: Peter Engardio, Senior Writer, BusinessWeek (retired)
Panel V: Helping Small Business: Current Trends and Programs
Moderator: David Audretsch, Director, Institute for Development Strategies, Indiana University
The “Mittelstand” Programs and Innovation in Germany
Small Business Innovation: Federal Investments to Cross the Valley of Death
Panel VI: Early-Stage Finance and Entrepreneurship
New Initiatives in Early-Stage Finance in Germany
Peter Terhart, Chairman, German Private Equity and Venture Capital Association (BVK)
The Clash of Innovation Cultures: The United States and Germany
Eran Davidson, Managing Partner, Hasso Plattner Ventures
Trends and Challenges for Venture Capital in the United States
Arati Prabhakar, Partner, U.S. Venture Partners
Panel VII: Policies and Programs for CO2 Reduction
Frauke Lohr, Senior Partner, Grolman.Result GmbH
U.S. Carbon Reduction Policies
Charles Ebinger, Director, Energy Security Initiative, The Brookings Institution
Climate Change and Innovation: Mitigation and Adaptation Measures
Panel VIII: Building Electric Vehicle Industries
U.S. Battery Initiative for Electric Drive Vehicles
Ed Owens, Supervisory General Engineer for Vehicle Technologies, U.S. Department of Energy
Panel IX: Medical/Biomedical Innovation for the 21st Century
Advancing Innovation and Convergence in Cancer Research
Medical/Biomedical Innovation for the 21st Century
Joachim Giesekus, Strategic Marketing, Fraunhofer Heinrich Hertz Institute (HHI)
Panel X: Policies and Programs to Build Solar Industries
Moderator: Peter Strunk, WISTA Management GmbH, and Adlershof Science Park, Berlin
Karsten Neuhoff, Director, Climate Policy Initiative (CPI-Berlin)
U.S. Initiatives in Solar Energy Policy
Minh Le, Chief Engineer, Solar Energy Technologies Program, U.S. Department of Energy
Roundtable—”Energy Change: What Are the Consequences for the German and U.S. Innovation Systems?”
Chair: Tim Stuchtey, Director, Brandenburgisches Institut für Gessellschaft und Sicherheit
Seth Winnick, Counselor for Economic Affairs, Embassy of the United States
Albert Rupprecht (CSU) Committee for Education, Research, and Technology
Recognizing that a capacity to innovate and commercialize new high-technology products is increasingly a part of the international competition for economic leadership, governments around the world are taking active steps to strengthen their national innovation systems. These steps underscore the widely held belief that the rising costs and risks associated with new potentially high-payoff technologies, and the growing global dispersal of technical expertise, require national R&D programs to support new and existing high-technology firms within their borders.
What is the impact of these initiatives for the competitive position of the United States? In a recent report, the National Academies warned that “this nation must prepare with great urgency to preserve its strategic and economic security,” adding that “the United States must compete by optimizing its knowledge-based resources, particularly in science and technology, and by sustaining the most fertile environment for new and revitalized industries and the well-paying jobs they bring.”1 Reinforcing this message, a new report by the National Academies describes the growth in foreign programs and investments in new technologies and industries while noting the decline in support at home for the traditional pillars of U.S. competitiveness. 2 The report urges steps to ensure that products derived from U.S. innovation are manufactured in the United States, so as to capture the economic activity and the high-quality jobs that they can bring.
Understanding the policies that other nations are pursuing to support their industries and to what effect is essential to understanding how the nature and terms of economic competition are shifting.3 U.S. policymakers would
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1National Academy of Sciences/National Academy of Engineering/Institute of Medicine, Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Future, Washington, DC: The National Academies Press, 2007, p. 4.
2National Research Council, Rising to the Challenge: U.S. Innovation Policy for the Global Economy, C. Wessner and A. Wm. Wolff, eds., Washington, DC: The National Academies Press, 2012.
3The Woodrow Wilson Center’s Kent Hughes has argued in this regard that the challenges of the 21st century require new strategies that take account of new technologies, new global competitors, as well as new national priorities concerning national security and the environment. See Kent Hughes,
benefit from knowing of the wide variety of innovation and competitiveness policies that leading nations have adopted. In the case of Germany, these innovation policies support industrial production and technology research through consistent investments in applied research programs buttressed by programs for job training and worker retention. German organizations such as the Fraunhofer Institutes partner with companies to turn advanced technologies into production processes and commercial products. These initiatives are coupled with active export promotion support from the highest level of government.
THE OVERALL PROJECT
The global economy is characterized by increasing locational competition to attract the resources necessary to develop leading-edge technologies as drivers of regional and national growth. One means of facilitating such growth and improving national competitiveness is to improve the operation of the national innovation system. This involves national technology development and innovation programs designed to support research on new technologies, enhance the commercial return on national research, and facilitate the production of globally competitive products.
The formal Statement of Task for the overall project states: Recognizing the importance of targeted government promotional policies relative to innovation, the Board on Science, Technology, and Economic Policy (STEP) is studying selected foreign innovation programs and comparing them with major U.S. programs. This analysis of Comparative Innovation Policy, carried out under the direction of an ad hoc Committee, includes a review of the goals, concept, structure, operation, funding levels, and evaluation of foreign programs designed to advance the innovation capacity of national economies and enhance their international competitiveness.
This analysis focuses on key areas of future growth, such as renewable energy, among others, to generate case-specific recommendations where appropriate. The Committee will assess foreign programs using a standard template, convene a series of meetings to gather data from responsible officials and program managers, and encourage a systematic dissemination of information and analysis as a means of better understanding the transition of research into products and of improving the operation of U.S. programs.
THE CONTEXT OF THE PROJECT
Since 1991, the STEP Board has undertaken a program of activities to improve policy makers’ understanding of the interconnections among science, technology, and economic policy and their importance to the American
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Building the Next American Century: The Past and Future of American Economic Competitiveness, Washington, DC: Woodrow Wilson Center Press, 2005, Chapter 14.
economy and its international competitive position. The Board’s interest in comparative innovation policies derives directly from its mandate.
This mandate has previously been reflected in STEP’s widely cited study, chaired by Gordon Moore of Intel, on how government-industry partnerships can support the growth and commercialization of productivity enhancing technologies.4 Reflecting a growing recognition of the importance of the surge in productivity that occurred in the mid-nineties, the Board also launched a multifaceted assessment, exploring the sources of growth, measurement challenges, and the policy framework required to sustain what was then characterized as the information and communications technology driven New Economy.5
The current study on Comparative Innovation Policy builds on STEP’s experience to bring together leading academics, public officials, business representatives, and policy experts from around the world to identify current trends and challenge faced by U.S. and foreign innovation programs.
PROJECT ACTIVITIES
To open its analysis, the study Committee held an overview symposium that drew together leading academics, policy analysts, and senior policymakers from around the globe to describe their national innovation programs and policies, outline their objectives, and highlight their achievements.6 Major conferences in Taipei and Tokyo focused on the evolution of the Taiwanese and Japanese innovation systems over the past decade.7 The Committee also convened a major conference in Washington that identified current trends in the Indian and U.S. innovation systems and highlighted the emerging U.S.—India innovation partnership.8
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4This summary of a multi-volume study provides the Moore Committee’s analysis of best practices among key U.S. public-private partnerships. See National Research Council, Government-Industry Partnerships for the Development of New Technologies: Summary Report, Charles W. Wessner, ed., Washington, DC: The National Academies Press, 2003. For a list of U.S. partnership programs, see Christopher Coburn and Dan Berglund, Partnerships: A Compendium of State and Federal Cooperative Programs, Columbus, OH: Battelle Press, 1995. See also National Research Council, U.S. Industry in 2000: Studies in Comparative Performance, David Mowery, ed., Washington, DC: National Academy Press, 1999.
5National Research Council, Enhancing Productivity Growth in the Information Age: Measuring and Sustaining the New Economy, Dale W. Jorgenson and Charles W. Wessner, eds., Washington, DC: The National Academies Press, 2007.
6For a summary of this conference, see National Research Council, Innovation Policies for the 21st Century—Report of a Symposium, Charles W. Wessner, ed., Washington, DC: The National Academies Press, 2007.
7For a summary of the Tokyo conference, see National Research Council, 21st Century Innovation Systems for Japan and the United States: Lessons from a Decade of Change, S. Nagaoka, M. Kondo, K. Flamm, and C. Wessner, eds., Washington, DC: The National Academies Press, 2009.
8For a summary of this conference, see National Research Council, India’s Changing Innovation System: Achievements, Challenges, and Opportunities for Cooperation, Charles W. Wessner and Sujai J. Shivakumar, eds., Washington, DC: The National Academies Press, 2007.
This was soon followed by a symposium on “Synergies in Regional and National Innovation Policies in the Global Economy” hosted by Flanders Vice Minister Fientje Moerman. This event reviewed the synergies and success of regional innovation policies in Flanders, buttressed by national and European Union programs. Flanders benefits from major university and research centers with strong commercialization records, and is also home to imec, one of the leading microelectronics research facilities in the world and arguably the flagship of Flemish technology policy.9 To address a growing opportunity in U.S. S&T cooperation with Europe, the Committee hosted a series of meetings to review the potential for greater U.S.-Polish cooperation in science and innovation, with particular attention to traditional energy sources (e.g., coal) and health. In a related effort, a major international symposium was convened to review national strategies to foster the development of science and technology research parks, with representatives from around the world.10
In light of China’s surging investments in science and new technologies, a number of meetings on China’s innovation policies were convened, beginning with a symposium in May 2010 in Washington, DC, on U.S.-China Cooperation on Science, Technology, and Innovation that drew together speakers primarily from the U.S. and Chinese governments and academia.11 This was followed in June 2011 with a series of meetings in Shanghai and Beijing that included U.S. and Chinese corporate leaders and leading Chinese academic researchers. These interactions were capped by a September 2011 symposium in Washington, DC, on U.S.-China Policy for Science, Technology, and Innovation.
Germany’s renewed focus on investments in R&D and education, worker retention and training, as well as its strong support for exports suggest opportunities for mutual learning and expanded cooperation. Accordingly, the Committee convened in 2010 a conference in Washington, DC, on Meeting Global Challenges: German-U.S. Innovation Policy. A second large conference was then organized in cooperation with the German Institute for Economic Research (DIW) in Berlin in 2011. This volume summarizes that conference. It examined U.S. and German approaches to support innovation and manufacturing both in terms of institutional support (e.g., by the Fraunhofer Institutes) and in specific sectors such as bio-medical, electric vehicle and solar technologies.
These two conferences highlighted the value of policy dialogue and cooperation on innovation for Germany and the United States. Both countries
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9National Research Council, Innovative Flanders: Innovation Policies for the 21st Century—Report of a Symposium, C. Wessner, ed., Washington, DC: The National Academies Press, 2008.
10This report has garnered considerable national and international attention. See National Research Council, Understanding Research, Science, and Technology Parks: Global Best Practices—Report of a Symposium, C. Wessner, ed., Washington, DC: The National Academies Press, 2009.
11For a summary of this conference, see National Research Council, Building the 21st Century, U.S.China Cooperation on Science, Technology, and Innovation—Summary of a Symposium, C. Wessner, rapporteur, Washington, DC: The National Academies Press, 2011.
seek to better translate research into innovations and innovations into successful products. Further, both countries can benefit through cooperation in addressing the “grand challenges” we face today, including those in climate, energy production, health, and security. The conferences underscored the opportunity for Germany and the United States to learn from each other and to gain by cooperating more actively with each other.
Drawing together the information and insights from this series of meetings, the Committee developed a consensus report that provides an overview of the changing international environment and offers a wide range of recommendations to support more effective U.S. innovation policies for the future.12
THIS WORKSHOP SUMMARY
This report captures the presentations and discussions of the 2011 Berlin symposium on Meeting Global Challenges: German-U.S. Innovation Policy. It includes an introduction highlighting key issues raised at the meeting and summary of the meeting’s presentations. This summary has been prepared by a rapporteur as a factual summary of what occurred at the workshop. The planning committee’s role was limited to planning and convening the workshop. The statements made are those of the rapporteur or individual workshop participants and do not necessarily represent the views of all workshop participants, the planning committee, the DIW, or the U.S. National Academies.
ACKNOWLEDGMENTS
On behalf of the National Academies, we express our appreciation and recognition for the insights, experiences, and perspectives made available by the participants of this meeting. We are greatly indebted to Klaus Zimmerman of IZA (the Institute of the Study of Labor) and then head of the DIW-Berlin, for his leadership and initiative as well as to Jens Schmidt-Ehmcke, who played an instrumental role in the organization of the conference and the identification of the many high-level German participants.
We are most grateful for the support and participation of U.S. Ambassador Murphy and his able staff and to Englebert Beyer of the Federal Ministry of Education and Research (BMBF) for his leadership, support, and substantive contributions to this cooperative German-American event.
We would like to express our thanks to Alan Anderson for preparing the initial overview and summary of the meeting in a very short timeframe. We also thank Sujai Shivakumar and David Dierksheide of the STEP staff for their work on the review and production of this report and recognize the efforts of
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12National Research Council, Rising to the Challenge: U.S. Innovation Policy for the Global Economy, C. Wessner and A. Wm. Wolff, eds., op. cit.
McAlister Clabaugh and David Dawson for their assistance in organizing this international conference.
ACKNOWLEDGMENT OF REVIEWERS
This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the National Academies’ Report Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for quality and objectivity. The review comments and draft manuscript remain confidential to protect the integrity of the process.
We wish to thank the following individuals for their review of this report: David Audretsch, Indiana University; Erik Lehmann, Augsburg University; Andreas Pinkwart, HHL-Leipzig Graduate School of Management; Jens Schmidt-Ehmcke, Hasso Plattner Ventures Management; and Klaus Zimmerman, University of Bonn.
Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the content of the report, nor did they see the final draft before its release. Responsibility for the final content of this report rests entirely with the rapporteur and the institution.
Alan Wm. Wolff Charles W. Wessner