Innovation Organization and Governance Around the World

Chapter 4

Innovation Organization and Governance Around the World INTRODUCTION The prevailing institutional environment is one “attractor” of paramount importance within any innovation ecosystem’s basin of attraction. It defines the organizational and governance arrangements that exist as well as the legal, institutional, and to a large extent the financial framework under which innovation ecosystems, at all levels, operate. The national innovation institutional frameworks are, generally speaking, congruent with the overall sociopolitical, legal, and economic orientation of the country in question. Variations exist, of course, due to the influence of local conditions or interrelations and interactions with other regions or countries. For many innovation sectors, the transportation sector included globalization and the increasingly international market for many innovation-related products and services have increased the extent and diversity of “systemic innovation”1 and have accentuated the blurring of forms and a move toward mixed or hybrid types of innovation ecosystem organization and governance. We are beginning to see the emergence of virtual innovation ecosystems that are unanchored to a geographic region. Technological alliances are forming between companies located in different countries such as the recent partnership between Baidu and Ford to enhance the sale of Ford vehicles in the People’s Republic of China (PRC) (Thadani, 2017). Also, international companies tend to locate their research and innovation production centers—or parts of them—in innovation ecosystems outside their countries of registration in order to benefit from the synergies in those ecosystems.2 Innovation ecosystems (virtual or real) have to abide by the rules and institutional frameworks imposed by the national and/or regional jurisdictions of the countries to which they are—legally and administratively—bound. In most cases, the system of national government that exists in the country of their location influences also the system of governance, administration, and organization of the innovation ecosystem, too. Centrally organized and governed nations tend to display centrally organized and financed innovation ecosystems that can take and implement decisions expediently and very closely focused on nationally set policy goals. Traditionally, the outputs of these national ecosystems tend to be emulative and produce incremental innovations rather than revolutionary ones. At the other end of the continuum, there are the decentralized, market-driven systems of national governance where national innovation ecosystems tend to be open, market driven, and use various types and sources of investment. They tend to produce greater levels of innovation (both incremental and revolutionary). There are three distinctive forms of national innovation ecosystem governance and institutional frameworks that can be recognized (see also Table 4.1): A. State-led system. In state-led systems, authority sharing within and between organizations involved in RTD&I3 tends to be limited by the high level of dependence on government agencies. Central coordination and government funding is the rule. Nevertheless, projects financed by the public domain are encouraged to cooperate with the private sector. The risks involved in developing major technological innovation is expected to be undertaken by the private sector or shared 1. For definition, see Chapter 1. 2. This is very evident in the United States/Silicon Valley where entrepreneurs from other countries have become a large percentage of the members of its ecosystems. According to the 500 Startups, a highly competitive technology incubator in Silicon Valley that is on a mission to discover and back the world’s most talented entrepreneurs help to create successful companies at scale and build thriving global ecosystems, the class of 2017 for 500 Startups was about 43% international. 3. Research, Technological Development & Innovation. This term is used to refer to the three main phases of an innovation cycle and the activities that take place there. When it is used with the word “system,” that is, RTD&I system, it is used as synonymous with the term “innovation ecosystem.” The Accelerating Transport Innovation Revolution. https://doi.org/10.1016/B978-0-12-813804-5.00004-8 © 2019 Elsevier Inc. All rights reserved.

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TABLE 4.1 Characteristics of the Three Basic Innovation Ecosystem Governance and Institutional Frameworks Characteristic

State-Led

Market-Driven

Mixed or Hybrid

Authority sharing

Limited

Considerable

Considerable

Involvement of public research and development systems

High

Passive-limited

Passive-active

Consideration of market demands

Limited (but can be significant for countries that have an export-led economy)

Considerable

Variable

Incremental vs revolutionary innovations

Mainly incremental

High ratio of revolutionary

Mainly incremental but occasionally revolutionary

Systematic nature of innovations

Limited (depending on top level decisions)

Considerable

Considerable

Regulatory intervention

High—Fundamental role

Medium (mainly bottom up initiatives)

Considerable

Use of incentives

Fundamental role

Limited, indirect

Medium,variable

Modified from similar Tables in Whitley, R., 2006. Characteristics of six ideal types of innovation systems. In How Europe’s Economies Learn. Oxford University Press, Oxford, 350 pp.; Whitley, R., 2008. Business Systems and Organizational Capabilities. The Institutional Structuring of Competitive Competences, Oxford University Press, Oxford, pp 771-784. doi:10.1093/ser/mwn017. Socioecon Rev (2008) 6(4), Published: 18 August.

between publicly owned entities and the purely private ones. A typical example of a state-led system is that of the Peoples Republic of China (PRC). The central government sets the rules, the goals, the means and procedures, and the funding for most economic activities including innovation. The unique feature of the PRC system (perhaps the one that clearly distinguishes it from other state-led systems) is the parallel existence of a strong and vibrant private sector that operates under market-driven conditions although under the strict supervision and goal setting by the government. B. Market driven. In market-based economies, the innovation ecosystems rely on (relatively) stable networks of financial commitments, exchanges, and collaborations between all relevant market players. These networks dominate technology-capital exchanges within and across sectoral boundaries to share knowledge and opportunities within distinct groups of public, private, and quasipublic organizations. The innovation ecosystem is, normally, built from the bottom-up through the initiative and continuous learning between ecosystem members which tend to follow technological trajectories. In such systems, governmental intervention is limited to rule-setting in respect to investments, intellectual property, the development, and enforcement of regulations governing the sale and operation of innovations as well as technological certification and evaluation activities.4 However, even in market-based systems, direct government intervention and financing can be both broad and deep when it comes to research and innovations that have national security implications. C. Mixed or hybrid systems. These systems combine the state-led governance characteristics with market-driven ones trying to combine the advantages of each of these systems. Consequently, such national innovation ecosystems also combine the structures and regimes that allow both market and centrally driven forms of RTD&I activities. Today, it is increasingly difficult to classify most national governance systems, as purely state-or market-driven ones. We, therefore, refer to them as “mixed or hybrid” systems. They display highly collaborative innovation ecosystems that involve considerable authority sharing with and between organizations and an active involvement of both the public and the private sectors. National, state, and local government bodies are often directly involved in encouraging “linkages” through the joint funding of projects and the establishment of government research programs dedicated to producing innovation. Innovation cycles are based on “learning” within an organization, or between an organization and industry or public-private collaborative institutions that connect formal knowledge production with technical development and application.

4. To use the example of the US State of California, the electric transport innovation revolution was greatly assisted by government regulations that required from automobile manufacturers the production of a specific number of electric vehicles per year. In the same state, regulations for the testing of autonomous vehicles were approved at the end of 2017 a development that is expected to enhance the production of innovation in this sector.

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As it is apparent from the above, there is quite a fundamental role for the regulatory involvement and intervention of governments at central or local levels, that is, the level and timeliness of regulation and the incentives that are put in place to facilitate innovation. In a sense, RTD&I activities and innovation ecosystems cannot exist without minimal “regulation” or government “intervention.” Such intervention includes items such as: l l

l l l l l

basic formal and informal rule-setting, governing the operation, and planning of research production; basic formal and informal rule-setting, governing innovation production, and innovation ecosystem operation in general; allocation of funds for research and innovation; evaluation procedures at all levels and stages; certification of excellence; facilitation of the interaction between the public and private sectors at all levels; and education and training support.

Some further characteristics of each of the above three governance and institutional frameworks are depicted in Table 4.1. Variations in the interaction and mix of the characteristics in each case produce the overall “model” of RTD&I activities that characterizes the corresponding national innovation ecosystem. This chapter examines in more detail the organizational and governance models for innovation as they are found to exist, at national level, in a select number of countries around the world. In a wider number of countries around the world, a short summary of existing RTD&I organizational regimes is given, by country, in Annex 1. The contents of this chapter are based on the results of relevant recent surveys taken within the frame of the European Union (EU)-funded research projects, namely EUTRAIN (2012) and FUTRE (2013), as well as our own research (Giannopoulos, 2018). We begin, with a (theoretical) taxonomy of innovation governance and organizational models.

CLASSIFICATION OF INNOVATION ECOSYSTEMS Basic Structures Classifying the forms of innovation ecosystem governance and organization according to similar characteristics will facilitate: a. describing the key elements that characterize each case to explain its functional characteristics; b. understanding the impact of these characteristics on the overall efficiency and effectiveness of the respective ecosystem’s “basin of attraction”; and c. defining the factors that influence success or failure in each case. At a general level of consideration, we can distinguish three basic “structures” of innovation organization and governance: A. “Dispersed.” This is primarily a bottom-up model in which private sector innovators, entrepreneurs, facilitators, and financiers (e.g., venture capitalists) are supported by interested stakeholders that compete freely in the relevant innovation ecosystem and “marketplace.” B. “Centralized.” This is based on more or less linear top-down hierarchical system of decision-making emanating from a central or regional governmental entity. The “centralized” model is the characteristic of public sector dominated national governance systems. C. “Intermediate.” This displays characteristics from both the above cases, that is, a mixture of dispersed and centralized situations. It can involve parts that are centrally organized having top-down functions such as goal setting and policy making and others that operate in a bottom-up fashion that recognizes the demands and inputs from the involved stakeholders.

Definition of the “Innovation Market” An innovation market is the virtual or real “place” where an exchange of research and innovation “products” takes place. It is also the place where research and innovation-related services, firms, and products are evaluated and priced. An “inno vation market”—like any conventional market—has two key sets of “players”: buyers and sellers. Its basic function is to allow the buyers and sellers to discover all necessary and relevant information and carry out a voluntary trade of their research and innovation “products” for renumeration. So, in a sense, an innovation market corresponds, for the most part, to a typical market.

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We can distinguish three levels of innovation markets: a. First-level market. This is the “research market,” that is, where an innovation cycle usually begins. The “product” at this level is the original research result that either belongs to the organization that financed the research (this is the “buyer” in this case) or to a new “buyer” in the form of an organization or institution that is interested in purchasing this piece of original research such as a venture capitalist. The original researcher, or the research organization to which he/she belongs, is the “seller.” The “buyers” at this level, that is, the “demand,” consist primarily of public sector organizations or large industrial companies (e.g., the auto manufacturing companies) that are interested in exploiting the research result or simply who have assigned the original research. b. Second-level market. This is the one that refers to a research product that has achieved the stage of technical feasibility, has been demonstrated, and has secured Intellectual Property Rights (IPR) in the form of one or more patents. The “sellers” are the owners of the patents. The “buyers” are third parties that buy the patents and the necessary technical specifications in order to produce the products or alternatively they may buy the whole start-up company that created and owns the patents. The “buyer” will then undertake the (mass) production of the innovatory product or service and its placement into the final (third-level) market. c. Third-level market. This consists of the society at large as “buyers,” that is, the individuals who buy the finished innovatory product or service. The “sellers” are the intermediary organizations of the previous case or the first-level “buyers.” The innovation ecosystem continuum contains all three of the above multiple levels of innovation “marketplace.” Each level may operate under the basic two ways of market operation, that is, the free-economy one, in which the free and open demand and supply interact and are the prime initiator of the activities, procedures, and prices; and the “planned-economy” one in which the demand and supply are centrally planned and influenced by the actions of a top-level authority. In the first case, the mechanisms of demand and supply interaction are the primary force for creating the equilibrium state of the innovation ecosystem while in the second, the “commanding authority” (which can be a central or regional government or the management of a large multinational industrial company that finances the research and innovation cycles) “enforces” an equilibrium which normally lasts as long as the protective policies remain in force.

Classification of Innovation Ecosystem Organization The above lead us to define a classification system that is three-dimensional (3D) with a total of 18 classification classes. The three dimensions are: (a) the three “structures” of innovation organization and governance (dispersed, centralized, and intermediate); (b) the two models of the market operation (“free-economy” and “planned-economy”); and the three levels of innovation ecosystem marketplace (first, second, and third). The resulting 18 classification classes are illustrated in Table 4.2. Several of these classes are not clearly visible in practice and must be considered as theoretical value only. This is indicated in Table 4.2 where we note (with x’s) the emphasis and visibility with which each case is “observable” in realworld countries or regions. Focusing on the transport sector, we can identify—in Table 4.3—the main “buyers” and “sellers” in each of the 18 innovation marketplace cases of Table 4.2.

TABLE 4.2 The 18 Classification Cases and Their Estimated Real-World “Visibility” Systems of Market Operation “Free-Economy”

“Planned-Economy”

Innovation Marketplace Levels

Innovation Marketplace Levels

Innovation Ecosystem Organizational Structures

1

2

3

1

2

3

Dispersed

xx

xx

xxx

x

x

x

Centralized

xx

xx

xx

xxx

xx

x

Intermediate

xxx

xxx

xxx

xxx

xx

xx

The x’s indicate the level of real-world visibility, that is., xxx, very visible (many cases found); xx, medium level of visibility; x, least visible.

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TABLE 4.3 The “Sellers” and “Buyers” in the Various Innovation Marketplaces in the Case of Transport Innovation Ecosystems Systems of Market Operation Innovation Ecosystem Organizational Structures Dispersed

Centralized

“Free-Economy”

“Planned-Economy”

Innovation Marketplace Levels

Innovation Marketplace Levels

1

2

3

1

2

3

Sellers: Any research producing entity, responding to a specific call or on its own initiative

Sellers: The buyers of the previous level (and individual researchers)

Sellers: The buyers of the previous level or private companies that buy the final goods or services from the buyers of the previous level

Sellers: Research producing entities (universities— research centers) or the large corporation who does the research for itself

Sellers: The central authority that assigned the research

Sellers: The buyers of the previous level or small companies under license from the buyers of the previous level

Buyers: Any interested stakeholder that calls and funds the research or the same entities that do the research

Buyers: Private companies that produce the final market goods or services and who buy also the IPRs

Buyers: The population at large as end users

Buyers: The authority that assigned the research (public or private)

Buyers: The same authority that assigned the original research or a small number of manufacturing or service providing companies. Also, units of the same authority that assigned and/ or performed the initial research

Buyers: The population at large as end users

Sellers: Transport research (university) units or major Institutes or research centers responding to a specific call or on its own initiative

Sellers: The buyers of the previous level

Sellers: The previous case buyers or large private or public companies that buy the final goods or services from the buyers of the previous level

Sellers: Publicly owned research producing entities (universities— research centers) or a large corporation who does the research for own benefit

Sellers: The buyers of the previous level

Sellers: The buyers of the previous level

Buyers: Government entities or large industrial

Buyers: Private or publicly owned companies

Buyers: The population at large as end users

Buyers: Governmental entities that assign the research or the

Buyers: Other government entities or small private companies that

Buyers: The population at large as end users Continued

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SECTION A Understanding Systemic Innovation

TABLE 4.3 The “Sellers” and “Buyers” in the Various Innovation Marketplaces in the Case of Transport Innovation Ecosystems—cont’d Systems of Market Operation Innovation Ecosystem Organizational Structures

Intermediate

“Free-Economy”

“Planned-Economy”

Innovation Marketplace Levels

Innovation Marketplace Levels

1

2

companies or the same entities that do the research

that produce the final market goods or services

Sellers: Any research producing entity, responding to a specific call or on its own initiative

Sellers: The buyers of the previous level

Buyers: Government entities or large industrial companies or the same entities that do the research

Buyers: Private or publicly owned companies that produce the final market goods or services

3

1

2

3

same entities that do the research

produce the marketable goods or services under license from the sellers

Sellers: The previous case buyers or large private or public companies that buy the final goods or services from the buyers of the previous level

Sellers: Publicly owned research producing entities (universities— research centers) or the large corporation who does the research for own benefit

Sellers: The central authority that assigned the research

Sellers: The buyers of the previous level or small companies under license from the buyers of the previous level

Buyers: The population at large as end users

Buyers: The authority that assigned the research (public or private)

Buyers: The same authority that assigned the original research or a number of manufacturing or service providing companies. Also, units of the same authority that assigned and/ or performed the initial research

Buyers: The population at large as end users

Within the transportation sector, there is also a further potential differentiation that can be observed if one takes into consideration the three “segments” in which any transport system can be distinguished, namely: infrastructures, operations, and equipment. In each of these segments, we can observe different innovation ecosystem characteristics and stakeholders involved. Table 4.4 illustrates these, in a simplified way, for the case of the third-level marketplace (i.e., the society as a whole). We now review a number of national innovation organization and governance systems in countries and/or regions around the world.

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TABLE 4.4 Market Characteristics and “Actors” Involved, Per Transport System Segment, in Third-Level Marketplace in Transport Innovation Ecosystems Transport System Segment

“Buyers”

“Sellers”

Characteristics of the “Market”

Transport Infrastructures

Infrastructure managers and operators (e.g., road authorities, agencies, governmental ministries, states, cities, construction contractors, and maintenance contractors)

Research institutes/ centers, academia, consultancies, infrastructure operators’ and contractors’ internal RTD Also, national/federal research organizations

Demand and supply match through the interaction of both public and private actors Major trend of this “market,” investments by entrepreneurs interested in the privatization of major transport infrastructures

Limited innovation market due to limited number of potential transport infrastructure RTD results buyers

Transport Operations

Regulators, infrastructure managers, transportation operators, cities, towns, regional authorities, states or national governments

Research institutes/ centers, academia, consultancies, transportation operators’ internal RTD, private entrepreneurs

Demand and supply match through public or private funds (but primarily private) aiming at optimizing the operation of transport systems operation

Large innovation market through offer and purchase of new systems and services for optimizing transport operation, traveler information systems, etc.

Transport equipment

Transportation operators, equipment manufacturers Also, infrastructure managers and operators for equipment related to their operations (e.g., road authorities, agencies, governmental ministries, states, cities, construction contractors, and maintenance contractors)

Major multinational equipment manufacturers’ and transportation operators’ internal RTD Also (to a lesser degree) research institutes, academia, consultancies

Demand and supply match through primarily private funds aiming at improving transport equipment

Large innovation market especially in the private cars manufacturing sector due to the large number of buyers of new (research results) products and services

RTD&I ORGANIZATION IN INDIVIDUAL COUNTRIES/REGIONS United States of America The organizational structure of the US RTD&I system of governance, in the case of the transport sector, is shown in Fig. 4.1. The main entities involved, are as follows: (a) Federal Government Departments relevant to the transport sector—mainly the Department of Transport (US/DoT) and the US Department of Energy (US/DOE). These are the leaders in publicly funded transport-related research. Many federal agencies involved in research and innovation in the transport sector are connected to these two departments. Among them are the Association of American State Highway Transport Officials (AASHTO), Federal Highway Administration (FHWA) and the similar agencies for all other modes of transport, etc. In addition, the National Aeronautics and Space Administration (NASA) and Defense Advanced Research Projects Agency (DARPA) of the US Department of Defense (US/DOD) play an important role in the development of transport innovations. (b) State Transport Departments, that is, the various DoTs in each state. Among them, the California Department of Transportation (CALTECH) and the New York Department of Transportation (NY/DoT) are the most well-known internationally. (c) Academic research centers at various universities (e.g., Stanford University, UC Berkeley, and Carnegie Mellon University) or independent research institutions funded by various organization such as Toyota; many of which are located proximate to major universities such as the University of Michigan and MIT.

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FIG. 4.1 Diagrammatic representation of the US RTD&I system (simplified).

(d) RTD&I promoting and/or funding agencies at federal or state level. In the transport sector, a world-renowned agency is the Transportation Research Board of the US National Academies (US/TRB). (e) Similar RTD&I promoting and/or funding agencies of private status, such as the US Institute of Transport Engineers, the US Institute of Electrical and Electronic Engineers (IEEE) and its transport-related branches, various venture capital (VC) firms, individual investors or companies, and so on. The legal and administrative frame for RTD&I is put in place by the federal or state governments through the various “authorization” or “reauthorization” legislation (e.g., the SAFETAE-LU act).

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In the transport sector, there are some 12 US Federal departments and 18 federal agencies involved in research programming and funding, as well as conducting research. Overall strategic planning and advice is provided by the Office of Science and Technology Policy (OSTP). This office sits in the Executive Office of the President and has a mandate to advise the President (and other levels of government) on the relevant policies to follow and on the effect that science and technology (research) policy will have on domestic and international affairs. The extent to which this mandate is fulfilled in practice depends on the specific administration in office and the President’s priorities and values concerning research and innovation. Strategic planning for transportation mainly comes out of the Departments of Transportation and Energy as well as from the specific modal agencies mentioned earlier. Research funding at federal level always occurs because of authorization by the US Congress. Each individual state has its own research program whose governance is performed by the relevant state government departments and coordinated by a central office, usually attached at the governor’s office. Some money for this research and innovation is provided to the states from the federal government while state tax revenues provide the major part. The federal government accounts for about one-quarter of all public spending on roads and highways, with the remaining three-quarters financed by state and local governments. Private sector funding and involvement is usually much higher than public funding to the rate of threefold or fourfold higher. For surface transport, the main channel of funding by the federal government is the Highway Trust Fund (HTF). This fund tracks federal spending and revenue for surface transportation and has separate accounts for highways and mass transit. In fiscal year 2017, its revenue was approximately $50 billion. This money is spent mostly through federal grants to state and local governments. The problem with the HTF is that there are long-standing restrictions on the use of its funds for experimental purposes. Other problems and restrictions affect the revenues flowing into the HTF and these are becoming a major issue. One of them is the fact that cars are becoming more efficient and consume less petrol for the same miles thus reducing the tax inflow to the fund. There is some discussion of moving to a tax system based on miles traveled but this option may produce negative political and equity impacts. As mentioned earlier, a major research funding and innovation promoting entity in the United States is the Defense Advanced Research Projects Agency (DARPA) of the DOD. This is the entity responsible for many breakthrough technologies as well as basic research in advanced systems and materials that are fundamental inputs for innovation in many sectors including the transport sector. For example, basic research supported by the DARPA was the initiator of the computer chips that undergird most transportation innovations. Much of the US research is subsidized through the DOD or through allocation of contracts by federal agencies.5 Another major pole of RTD&I activities is the FHWA for highways and road transport. Most FHWA funding has produced so far incremental innovations, not revolutionary ones, but the agency has played a key historical role in US highway research. For many years, it enjoyed preferential treatment (and funding) by the federal government as the emphasis was on the development of the national highway system. However, several factors including greater congressional designation for research in other modes and research performers as well as increased state RTD activity due to growth in State Planning & Research (SP&R) funding have recently reduced its role. Nevertheless, the FHWA continues to be a major performer of RTD&I activities in the United States responsible for addressing highway issues of national interest and managing large national-level RTD programs in the United States. Its center for Accelerating Innovation and its Every Day Counts (EDC) program, which is a part of the Office of Innovative Program Delivery (OIPD), are fundamental tools for driving incremental innovation that is largely consistent with the legacy paradigm. The consequence is that the FHWA is not a major player in the deployment of the innovation revolution in transportation. The Small Business Innovation Development Act of 1982, which established the Small Business Innovation Research (SBIR) program6 is arguably the hallmark policy initiative in the United States to support technology development and commercialization in small firms. The SBIR program is a highly competitive program that encourages domestic small businesses to engage in federal RTD that has the potential for commercialization. Of interest, is also the 2007 initiative of the US Department of Commerce to appoint an Advisory Committee of business leaders and academic researchers entitled, “Measuring Innovation in the 21st Century Economy” to explore improved innovation metrics. This Advisory Committee was established by the US Secretary of Commerce in order to recommend ways to improve the measurement of innovation in the economy. In its report, the Advisory Committee outlined its recommendations to the Secretary of Commerce for steps

5. Under the Republican Congress and President, voted to power in 2016, the use of tax dollars to stimulate innovation is unlikely. The only exception is military-related research, like in the DARPA. 6. See: https://www.sbir.gov/

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to be taken by the government, the business community, and government and private sector researchers to foster and improve the measurement of innovation in the economy.7 Around that time, in 2008 as a result of the economic meltdown, an important boost for producing transformational innovation in the United States (in many sectors including transportation) were the various stimulus packages that were provided. The aim was to provide funding that would enter the economy quickly to produce new jobs and concomitant spending increases. However, stimulus money allocated to RTD&I may not necessarily have the same rapid political impact as money invested in fixing road potholes or repairing bridges. Some analysts see such funding as a tool for reducing the impact of funding cuts that are already planned and they hold that, even during the height of the economic meltdown, the US government should not have intervened in the economy through stimulus packages. In the short run, however, such stimulus money could be used by the private sector to maintain viability and develop innovation. Private sector involvement in innovation activities in the United States is very significant, certainly so in the transport sector. Historically, the federal and state levels of government have long been the primary drivers of transport innovation in the United States reaching back to the creation of transcontinental railroads and steamships. However, such federal spending has been on the decline since at least 2000. In 2012, 63% of all RTD spending in the United States came from industry and other sources. Universities and nonprofits provided approximately 7.2% of all RTD funding (SSTI, 2015). Recent examples of private sector investment for innovation activities in the transport sector include: the $500 million investment by legacy car manufacturer General Motors (GM), in January 2016, to develop on-demand mobility services through the buyout of Lyft Inc. GM also laid out plans to develop an on-demand network of self-driving cars with a ridesharing service and teamed with Japan’s Softbank to invest $2.25 billion into autonomous vehicles. Only months earlier, Softbank had invested $7 billion in Uber for a 15% stake (Fiegerman, 2017). On February 15, 2017, another US legacy car manufacturer, Ford, announced that it would invest $1 billion over 5 years in the start-up Argo AI (which was led by Google and Uber veterans) to develop a self-driving car (McFarland, 2017). Ford also announced that it was doubling its investment in electrified vehicles as part of an initial investment of $11 billion (Lienert, 2018). In addition to the legacy car manufacturers, companies like Google and Apple are investing heavily in artificial intelligence technology to create innovation systems for a wide array of autonomous and electric vehicles owned by other companies. Google has spent more than $1.1 billion, until the end of 2017, on its autonomous vehicle spinoff, Waymo created in 2015. Waymo is also strengthening its partnership with Fiat Chrysler to offset the new partnership between GM and Softbank. It recently ordered thousands of Chrysler Pacifica minivans to populate its autonomous ride-hailing fleet (Etherington, 2018). The US private sector is clearly a driver of innovation within the transportation sector at a time when the role of government continues to contract.

European Union The EU—a union of 28 independent European countries—requires its member national governments and their related national institutions to align under the legislative and supervisory jurisdiction of the four EU pillars of governance: l l

l

l

the European Commission (EC)—the administrative and managing pillar; the European Parliament (EP)—the legislative body that consists of some 600 elected representatives of the European citizens; the Council of Ministers (CM)—the executive branch that consists of the correspondent ministers of the 28-member states in each sector of the economy; and the European Court of Justice—the judicial branch of the European governance.

The bulk of EU-funded transport research (and most of the research in all other sectors) is conducted under the relevant DG (Directorate General) of the EC. The main instrument for this purpose is the 7-year Framework Programs (FPs) for research and innovation that are planned and conducted with the administrative and managerial care of the relevant EC DGs and their “agencies.” Fig. 4.2 shows, in a diagrammatic and simplified way, the EU system for RTD&I relevant to the transport sector and its main stakeholders. The principal DGs in the EC that are involved in transport research are the DG RTD&I (Research Development and Innovation) and DG MOVE (mobility and transport). The EC is assisted in its role as funder of transport research by several special bodies that advise it on matters of strategic planning, as well as of programming and monitoring. 7. See also “FY 2008 Performance and Accountability Report” US Department of Commerce, available in: http://www.osec.doc.gov/bmi/budget/ FY08PAR/DOC_PAR_FY08_508version.pdf (Accessed July 2018).

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European Commission National R&D administrations, attached to

.,H2020)

committees, agencies that advice and /

, for example:

(universities,

Transport program Committee

national level

., road, rail, associations

FIG. 4.2 Diagrammatic representation of the EU transport research system (simplified).

These principal among these, are: the four European Technology Platforms (ETPs) in the transport sector, the Transport Advisory Group (TAG) and the Transport Program Committee. The ETPs that are involved in transport research are the: European Transport Research Advisory Committee (ERTRAC),8 European Rail Research Advisory Committee (ERRAC),9

8. See: http://www.ertrac.org/ (Accessed June 2018). 9. See: http://www.errac.org/ (Accessed June 2018).

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Advisory Council for Aviation Research and innovation (ACARE),10 and Waterborne11 for maritime research. The TAG was an advisory body under the DG RTD&I that consisted of experts from almost all EU member countries that advised on each overall Work Program for Research in the transport sector under each of the last two 7-year FPs of the EU (the 7th FP and the H2020 Programs). The Transport Program Committee is the official body that comments and approves the Transport Research Work Program for each call under the EC’s FPs. It consists of the national representatives of all 28 EU member countries. In the past decade or so, the total transport research funding by the EC amounted to approximately 1 billion euros for each 7-year period (approximately 7%–8% of the EC’s total research funding for all sectors). This amount, which is normally matched by an equal amount of “own funding” from the research participating entities, represents a mere 6%–7% of the totally available research funding for the sector, that is, when one includes the research funding by the national governments of the EU member countries. Besides the EC, each EU-member country has its own national transport research program which is normally embedded within its overall research funding activities. The bulk of the European publicly funded transport research is performed in these national RTD&I programs. All public money devoted to research and development is normally matched by the private sector on approximately 50%–50% basis. The private sector companies (in the case of transport, mainly the European autorelated industries and the large transport operators) are very actively engaged in RTD&I. The great majority of this private sector research effort is performed by the automotive sector. The EU research provider community consists of universities, research centers, private consultancies, and private sector research performing entities. They are all actively pursuing transport research at European and, in many cases, world level. They are also involved in research implementation activities for their own research or through innovation promotion centers at national level. They are represented by many associations, partnerships, and other entities the most pronounced of which are as follows: l

l l l l l

ERTICO/ITS Europe—a partnership of around 100 companies and institutions involved in the production of intelligent transport systems (ITS) in Europe12; ECTRI—the European Conference of Transport Research Institutes13; FEHRL—the Forum of European National Highway Research Laboratories14; CEDR—the Conference of European Directors of Roads15; EARPA—the European Automotive Research Partners Association16; and ETRA—the European Transport Research Alliance (a partnership formed in 2012 by five European Transport Research Associations).17

The picture is completed by the existence of many other transport stakeholder organizations such as user associations or advocacy organizations that communicate their research and innovation interests or use their voices to influence respective constituencies in the National Parliaments or the EP. Examples: l l l l

EPF—European Passengers Federation18; FEMA—Federation of European Motorcyclists’ Association19; LTW—London Travel Watch20; and APTU—Association of Public Transport Users.21

10. See: http://www.acare4europe.org/ (Accessed May 2018). 11. See: https://www.waterborne.eu/ (Accessed June 2018). 12. See: http://ertico.com/ (Accessed August 2018). 13. See: http://www.ectri.org/ (Accessed August 2018). 14. See: http://www.fehrl.org/ (Accessed August 2018). 15. See: http://www.cedr.eu/ (Accessed August 2018). 16. See: https://www.earpa.eu/ (Accessed August 2018). 17. Although today somewhat weakened, the ETRA remains a unique example of cooperation between transport research providers. It needs to be strengthened in the future and its example further promoted worldwide. For more, see: http://www.etralliance.eu/ (Accessed July 2018). 18. See: http://www.epf.eu/wp/ (Accessed August 2018). 19. See: http://www.fema-online.eu/ (Accessed August 2018). 20. See: http://www.londontravelwatch.org.uk/links/local_transport_user_groups (Accessed July 2018). 21. See: https://bettertransport.org.uk/local-groups/association-public-transport-users-aptu (Accessed July 2018).

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The transport research and innovation production system of the EU is unique in the world. It is both independently driven— mainly by the relevant sector policies that are translated to “Strategic Research Agendas”—while at the same time respects and accommodates the national priorities and interests of its member countries. Research agendas, at EU level, are formulated through a mixed top-down and bottom-up approach in which the relevant EC DGs formulate an initial proposal (taking into account bottom-up needs and suggestions) and this proposal is then discussed, modified, and approved by a number of advisory and/or decision bodies which have broad representation by EU member countries’ experts or representatives. Coordination between the national RTD&I programs (i.e., of the 28 member countries) is done through the so-called ERA-NET programs but there is still a long way to go by way of putting in place a solid coordinative mechanism. A most notable initiative aimed at reducing the fragmentation that exists from the coexistence of several national and regional European public research programs, are the so-called Joint Programming Initiatives (JPIs).22 These are commonly funded research programs in a given sector by a number of countries that display joint calls and joint research programs. It is a most notable experiment in cross-national cooperation for RTD&I that is worth looking at in more depth (Giannopoulos, 2017). The creation of an integrated European Research Area (ERA) is a strategy within the EU for the creation of a uniform and coordinated European research and innovation space covering all EU member countries. The long-term goal of the ERA is to create a uniform research and innovation space which would be competitive and resourceful enough to produce results that meet the policy goals of the EU.23 A prominent feature in the research implementation landscape of the EU, aimed at bringing together the research production and research implementation sides of the European innovation ecosystem, is the so-called ETP which was mentioned earlier. These are associations operating independently (self-financed bodies) and consisting of many representatives from the transport industry (manufacturers or operators) and research organizations. They are primarily involved in formulating Strategic Research Agendas (SRAs), that is, statements of future needs for research in their specific field of interest. They are also involved in road mapping of specific technological developments as well as ways and means for producing innovation by bringing closer the research providers and the corresponding industrial research up-takers. As mentioned earlier, a very large percentage (around 90%) of European research and innovation activities takes place on a national basis, that is, funded and initiated by the EU member states. Of this 90% more than 65%–70% is performed by the private sector24—mainly the auto manufacturers (Wiesenthal, 2015). These national efforts are the major source of innovation—usually driven by the corresponding European industry and the private sector through research and innovation activities that take place within large or medium-sized companies. Such activities are supported by governments normally through publicly funded research and innovation activities. Below, we refer to two characteristic examples of European national research and innovation systems, namely those of Finland and Germany: l

l

In Finland, the Funding Agency for Technology and Innovation (TEKES) leads the drive to involve the commercial sector in research and innovation production in the country.25 The industrial private sectors that are active in the transport sector are always involved quite explicitly, in one way or the other, in many research and innovation projects financed by TEKES. A very interesting and innovative (in its own right) publication that expresses this spirit of industry-led innovation in Finland can be found in Carleton (2013). The approach in Finland is becoming quite typical in other European countries as well—at least those that have an active transport sector. In Germany, the relevant ministries for transport research and innovation funding are the Federal Ministry of Education and Research (BMBF), the Federal Ministry of Transport, Building, and Housing (BMVBW), the Federal Ministry of Economics and Technology (BMWi), and the Federal Ministry for the Environment, Nature Conservation, and Nuclear Safety (BMU). They supervise and fund a large network of research centers or university research units which are involved in both publicly and privately funded research. Publicly funded research funding is channelled via major research organizations such as the Helmholtz Association or the Fraunhofer Gesellschaft which are encompassing a number of world leading research centers and institutions. The German Federation of Industrial Cooperative Research Associations (AIF) coordinates considerable cooperative industrial research programs which are financed

22. See: http://ec.europa.eu/research/era/joint-programming-initiatives_en.html (Accessed July 2018). 23. These policy goals, for the transport sector, are expressed in the Transport White Paper of 2011, which is the latest of such policy papers that spans the period 2011–20 (European Commission, 2011). 24. Private companies like Mercedes are investing heavily in electric and autonomous vehicles in Europe while at the same time turning their attention to the United States where Mercedes plans to invest $1 billion in electric vehicle production in the United States (Lambert, 2018). Likewise, Volkswagen has committed $40 billion to electric cars, autonomous driving, and new mobility services by the end of 2022 (Cremer and Schwartz, 2017). The center of gravity for transportation innovation in Europe is clearly not in the public sector but on the private realm. 25. TEKES runs some 20 national technology programs in Finland, which involve about 2000 companies and 500 research units.

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from funds of the Federal Ministry BMWi. These programs compliment and support the industry’s own efforts in the field of research and technology development. Some 50,000 businesses, most of them small and medium-sized enterprises (SMEs) have established a total of more than 100 industry or technology-related research associations that are under the umbrella organization of the AIF. Private sector involvement and funding for RTD&I covers a major part of the total national German RTD&I activities. In the field of transport, all major automobile manufacturers in Germany fund their own research and innovation to the amount of many billions of euros every year (Wiesenthal, 2015). In 2017, VC companies in Germany have invested €2.4 billion across 636 deals. Most notable is also the way in which German private foundations support public research € die Deutsche funding. The German Association for the Promotion of Science and the Humanities (Stifterverband fur Wissenschaft26) is the most notable example. It is a joint initiative started by German companies and foundations devoted to consulting, networking, and promoting improvements in the fields of education, science, and innovation. It is an example of a successful concerted action of the industry to participate and promote its participation in the national innovation production process. The Stifterverband Association administers many hundreds of private foundations supporting research and innovation production, including in the transport field. As of March 2017 and through its subsidiary Deutsche Stiftungszentrum (DSZ),27 the Stifterverband manages over 610 foundations with total assets of €2.6 billion. In total, some 3000 members have joined forces in Stifterverband, including many German Stock Market Index (DAX)28 companies, other mid-sized companies, company associations, donors, and active private individuals. Other large private sector German foundations—such as the Volkswagen Foundation, the Thyssen Foundation, the Robert Bosch Foundation, the German Foundation for the Environment, and the Bertelsmann Foundation—sponsor projects or organizations from a wide variety of different fields of research.

People’s Republic of China While the PRC (or simply China) relies primarily on a state-led model of innovation, it also has a viable and vibrant private sector that is heavily involved in research and innovation production. The national research and innovation development organizational system in China is a typical “state-led” model but with strong private sector that may produce and promote innovation along “market-economy” lines especially for its international competitive activities. Overall, the Chinese RTD&I system follows the top-down goals and policies of the central government, that is, the State Council of the PRC. Fig. 4.3 shows the linear way in which RTD&I authority and funding is transferred from the top levels of government to the lower peers—in the case of the transport sector. The Ministry of Transport (MOT), as the ministry responsible for FIG. 4.3 The linear model of Chinese RTD&I authority and funding.

Chinese Premier

The State Council of the People’s Republic of China

Ministry of Transport (MOT) of the People’s Republic of China

Ten Functional Divisions

Provincial Governments

26. See: https://www.stifterverband.org/english. 27. See: https://www.deutsches-stiftungszentrum.de/ueber_uns. 28. The German stock market index.

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road, rail, air, and water transport, oversees the overall allocation of public funding for transport-related research and innovation. Its authority links the top levels of the central government to the provincial and local governments. There are 10 functional divisions under the MOT that cover the various functional areas of the ministry.29 Their main duties are as follows: l l l l l

formulate and implement development plans in their respective areas; formulate policies and standards for the road, rail, water, and air transportation industries; plan, promote, and coordinate a more integrated transport system; promote the interconnection of the various modes of transportation; and promote and fund research and innovation activities in the transport sector.

Fig. 4.4 shows an overall picture of the main research and innovation governance entities in the PRC (in all fields of research including transport). The primary sources of transport RTD&I funding in China are both the central government and large (multinational) private companies. Public-private partnerships are also playing an increasing role in most sectors, including transportation. Table 4.5 illustrates the main sources of funding for transportation research in China as they were reported in a recent questionnaire survey.30 The centrally, state-led innovation system in China and its close relationship to the government’s planning and policy decision-making is amply demonstrated by the country’s recent involvement in the electric car market. Based on the recent

Ministry of Education

China Scholarship Council Ministry of Science and Technology Ministry of Finance and Commerce

Supports university related R&D, science parks, and HR development together with MOST

National S&T policies and programs Provides tax relief for high-tech products and preferential treatment for FDI in high-tech sectors

Research institutes and regional programs

Research institutes in enterprises

Research institutes

National Peoples’ Congress

State Council leading Group of S&T and Education

Chinese Academy of Social Sciences Funds research institutes and conducts research Chinese Academy of Sciences Chinese Academy of Engineering

Promotes innovation through the knowledge innovation program

Manages innovation fund for small, techbased firms with MOST

The State Council Provides policy advice National Natural Science Foundation of China Political Consultative Conference

Funds basic and applied research State Council Office

Sectoral Ministries Defines and implements sectoral R&D policies with MOST Ministry of Human Resources and Social Security State Administration of Foreign Export Affairs

Attracts overseas Chinese scholars' and manages post doc programs Sets policies regarding patents and Intellectual property Productivity Promotion Center

State IP Office

Supports innovation in SMEs with MOF and MOST

National Development and Reform Commission

FIG. 4.4 China’s RTD&I-related leadership structure and main functions. Note: HR, Human Resources; IP, Intellectual Property; MOF, Ministry of Finance; MOST, Ministry of Science and Technology; SME, Small and Medium-sized Enterprises. (From McCuaig-Johnston, M., Zhang, M., 2015. China Institute, Occasional Paper Release—China Embarks on Major Changes in Science and Technology, University of Alberta, Occasional paper Series vol. 2, 2, June, Alberta as reported in Giannopoulos, G. (Ed.), 2018. Publicly funded Transport Research in the PR China, Japan and Korea: Policies, Governance and prospects for cooperation with the outside world. In: Lecture Notes in Mobility. Springer, Cham.)

29. The railways which until 2013 was a separate ministry is now such a functional area of the MOT—the State Railway Administration (SRA). 30. See: Munro and Giannopoulos, Chapter 3 in Giannopoulos (2018).

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TABLE 4.5 Main Sources of Transportation Research Funding in China Public Funding

Private Fundinga

International Funding

National Natural Science Foundation of China

Yes

Vehicle auto manufacturers and OEMs

World Bank

Chinese Academy of Sciences

Yes

Transportation Network Companies

World Resources Institute

Ministry of Science and Technology

Yes

Mapping and Navigation Service Providers

Energy Foundation

Ministry of Education

Yes

There are number of private EV manufactures in China that are supporting research

Intergovernmental research cooperation programs

Ministry of Public Security

Yes

Ministry of Housing and Urban Rural Development

Yes

Ministry of Industry and Information Technology

Yes

Provincial Governments

Yes

Local Governments

Yes

Public Funding

Foreign car manufacturers

a

Includes some special programs donated by private sponsors (e.g., the Yangzi Scholar program).

strategic policy, set by the Chinese government, known as “Made in China 2025,”31 which seeks to transform—by 2025— the country from a low-cost manufacturer to a high-tech power dominant country in 10 advanced industries (among which transport and electric vehicles), the Chinese government has decided to promote rigorously electric mobility in China. The policy is also justified by the choking of major Chinese cities in air pollution. In implementing this policy, the Chinese government—starting in 2016—poured billions of dollars into subsidies and state investment in promoting research, innovation, and manufacturing activities in electromobility activities—mainly the construction of electric vehicles. For the 5-year period 2016–21, the total state investment (including subsidies) in electric mobility in China is planned to be more than $60 billion in funding. This will be spent on research and development activities as well as subsidies for electric (and more generally “new energy”) vehicle construction and for regional governments to pursue a number of relevant tasks. After 2021, these subsidies are expected to be phased out. In parallel, the Chinese government is funding a $4.5 billion investment for the national network of battery-charging stations. In parallel to the direct subsidization for the construction of electric vehicles, the Chinese government has introduced a scheme under which the carmakers that operate in the country will earn positive credits for every electric or hybrid vehicle which they produce and at the same time, they will be charged negative credits for every traditional, internal combustion, vehicle they produce. The credit (or “debit”) scheme is based directly on the number of units produced. The positive or negative “credits” are exchanged, as a plus or minus, for subsidies and government funding. Rushing to comply with this plan of credits, not only Chinese but also foreign auto manufacturers operating in China (e.g., VW, GM, Ford, and others) have announced joint ventures, with smaller Chinese counterparts to take benefit of the electrification “credit” system. A negative by-product of the credit scheme introduced is the construction of small and low-quality electric cars aiming to simply meet the “number of units produced” quota as the companies want to get the credit with the minimum cost on their part and thus maximize their benefits. Already, Chinese consumers make it clear, through their choices, that they prefer the roomier and more comfortable internal combustion cars as compared with the narrow and smaller electric ones (that resulted from the above direct “credit” system).

31. The “Made in China 2025” policy (“中国制造2025”) is an initiative adopted in May 2015 by the Chinese government to comprehensively upgrade Chinese industry. The goal was to comprehensively upgrade Chinese industry, making it more efficient and integrated so that it can occupy the highest parts of global production chains. The plan identifies the goal of raising domestic content of core components and materials to 40% by 2020 and 70% by 2025. The initiative draws direct inspiration from Germany’s “Industry 4.0” plan, which was adopted in 2013.

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In terms of innovation production, the above policies and the related governmental investments have already created some impressive quantitative results. Although foreign rivals have an edge on patents for technologies for hybrids and combustion engine power trains, Chinese companies have already an edge on patents for battery-powered technologies. A similar edge is sought on all “clean energy” technologies for new energy vehicles (NEVs). Already China is the world’s largest maker of electric vehicles and by 2030 is expected to account for 60% of world sales of NEVs. In 2016, it sold 507,000 units including electric buses and commercial vehicles, that is, approximately 45% of the world’s total32 and the Chinese government has set a target to manufacture 7 million battery-electric cars and hybrid vehicles by 2025. Already two of the top five lithium battery makers in the world, CATL and BYD, are Chinese. In 2017, there were 171,000 electric charging stations all over China33 and this number is expected to increase drastically over the next 3 years. By comparison, in the United States, there were approximately 44,000 charging outlets and 16,000 electric stations, in the same period.34 There are several problems and weaknesses in the Chinese “transport electrification” model.35 The decision-making process of a central planning apparatus does not allow sufficient room to support an overall system of interactions by all relevant stakeholders. In a more open, market-led system such stakeholders and especially the users are regularly consulted and by the sharing of data and experiences, valuable feedback is given for the formulation of the final policies. In a centrally planned and guided system, it is more likely to obtain mixed results and have a relatively high number of failed projects inspired more by political necessities than economic demand. Such was the case, for example, of past investments in high-speed rail in China which have spiraled very high and the case of the traffic straddling electric buses which failed in 2017 with accusations of fraud and other problems. The large-scale subsidies in the Chinese model in order to enforce the preferred policies and influence innovation markets have also often resulted in overcapacity as entrepreneurs pile-on to receive benefits from such government subsides. For example, in fields such as steel production, solar panels, and others, the Chinese policies of high subsidization have caused worldwide gluts. Some fear that electric vehicles may produce similar results as already more than 200 Chinese companies have announced plans to manufacture electric vehicles or their parts (e.g., batteries) taking benefit of the existing subsidies. An open question is what will happen to the market for battery-powered cars and hybrids in China after the heavy subsidies that exist today, stop to exist. A credible “day after” scenario may well be the closure of most of the current companies that manufacture electric cars, or their systems, as they are now almost entirely reliant on subsidies to stay competitive. In January 2017, these subsidies were lowered by 20% and as result, demand for electric cars plummeted. Sales of the BYD, E6 electric car—the group’s best-performing electric model in 2016—fell 62% in the first 6 months of 2017 compared with the same period a year earlier. Overall, BYD sales of battery cars and hybrids fell 20% between January and June 2017, in the wake of the subsidy cut. Another factor to consider is the consumer preference factor that has dominated western market decisions for decades now. This is likely to affect and even reverse many central planning decisions as a new middle class gains economic and political power in China. Already, in spite the fact that the Chinese government offers the most generous purchase incentives of any country, maybe except Norway, this has not translated into mass adoption of electric vehicles. While in Norway, hybrids were 24% and electric vehicles 15% of new purchases, in 2016, in China they made up just 1.32% of the total number of cars on the road. In many places in China, combustion engines have made a stealthy comeback. All in all, new factors enter the play and these in addition to globalization and international competition may force the state-led system of China to change. The heydays of China’s central planning—in which the government had a free hand to ignore what consumers wanted to buy and what manufacturers wanted to make—may be changing. As regards private sector involvement in Chinese transport innovation, we note that the growing insertion of international capital in the transport sector in China and vice versa is expected to produce a profound and transformative effect on transport sector innovation over the long term. There is, in China today, a vibrant private sector investing large amounts of money in producing innovation. Between 2014 and 2016, China attracted $77 billion in VC investment, compared with just $12 billion in the preceding 2 years. China is now among the world’s top three markets globally for VC in digital technologies including virtual reality, autonomous vehicles, 3D printing, drones, and artificial intelligence. About one-third of the world’s 262 “unicorns” (start-ups valued at more than 1 billion dollars) are in China and account for 43% of the global value of such companies (Chandler, 2017).

32. According to the China Association of Automobile Manufacturers (CAAM), at http://www.caam.org.cn/english/ (Accessed November 2017). 33. According to Xinhua, China’s official news agency. 34. According to a Financial Times article by Charles Clover “Electric cars: China’s highly charged power play,” October 2017. 35. These have been discussed and documented in a recent article in the Financial Times by Charles Clover, “Electric cars: China’s highly charged power play,” Financial Times, October 12, 2017.

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The picture of the PRC today is one of the increasing private sector involvement in the RTD&I process. Overall, China’s mixture of state control and private sector investment seems to have worked well so far having created a unique and powerful innovation machine.

Japan The Science, Technology, and Innovation (ST&I) governance in Japan36 is an example of a mixed or hybrid type of innovation governance. It combines a bureaucratically centralized top-down control, with “bottom-up” input from associations, research centers, major private sector/industrial sectors, and academia. The influence of various public and private organizations on national RTD&I policies varies greatly from sector to sector. In the transport sector, the auto industry is the major player traditionally influencing national RTD&I policies. The overall structure of Japanese ST&I governance is shown in Fig. 4.5. Domestically, in Japan, competition in a traditional sense takes a back seat to quiet consensus building. Despite pronouncements and political leadership, Japan remains a relatively closed society wherein internal competition is tightly controlled. Thus, strategic RTD&I policy is set at the highest levels of government based upon input from academia and major corporations. Japan is imbued with a culture that emphasizes cooperation. This culture has helped to produce a common innovation production vision that has successfully been transformed from principles into practice. The symbiotic

(they

universities ministries

Policy councils on key policy fieds (budget allocation, basic strategy)

FIG. 4.5 Organization and structure of the Japanese RTD&I governance.

36. The term Science, Technology, and Innovation—ST&I is used in the Japanese Science, Technology and Innovation Basic Plans. It is considered as synonymous to the term RTD&I used in this book.

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relationships between government, universities, companies, research centers, and associations are emblematic of historically successful innovation ecosystems, if not so competitive as one might wish. The basic governance structure for Science (research), Technology, and Innovation policy in Japan that is shown in Fig. 4.5 shows that the top body for formulating and monitoring the implementation of the Japanese RTD&I policies is the Council of Science and Technology Policy (CSTP) whose Chair is the Prime Minister and members are the seven most relevant ministers. The council responds to the Prime Minister’s inquiries regarding systematic promotion of research and innovation and overlooks the implementation of the 5-year Science and Technology Basic Plans. The CSTP supervises 14 ministries that are active in RTD&I activities and is in direct liaison with the cabinet, which is supported by the cabinet office. The cabinet office supports the Cabinet and the CSTP in formulating important policies regarding RTD&I in Japan and coordinates with the relevant ministries, including the Ministry of Education, Sports, Science, and Technology— MEXT.37 The cabinet office also supervises “policy councils” which are constituted in each policy field. The one more relevant and most active ministry for the ST&I in Japan is the Ministry of Education, Sports, Science, and Technology or MEXT. The MEXT is actively involved in: l l l l

supervising nearly 800 universities; liaising and coordinating other ministries involved in the ST&I funding and work; coordinating independent research institutes; and coordinating with the Inter-University Research Institute Corporations (research entities in a specific field or area that comprise several cooperating university or other research entities).

Although the MEXT supervises and funds transport research too, there are also other key stakeholders in the Japanese Transport RTD&I scene which are a follows: l

l

l

l

l

l

l

l

Ministry of Land, Infrastructure, Transport, and Tourism (MLIT): This is the governmental body of national transportation. It has its own research grant program.38 National Institute for Land and Infrastructure Management (NILIM): This is the Policy Research Institute for Land, Infrastructure, Transport, and Tourism (PRILIT) and Port and Airport Research Institute (PARI): they all belong to the MLIT. National Research Institute of Police Science (NRIPS): It is a research agency under the National Police Agency. Its main research field is traffic accidents. Institute for Transportation Policy Studies (ITPS): It is an independent, nonprofit foundation established under the auspices of the MLIT. Its main research covers general policy, rail, aviation, port, and public transportation. Institute of Behavioral Sciences (IBS): The IBS is a nonprofit research organization whose aim is to contribute public welfare in areas falling within the jurisdiction of the Ministry of Internal Affairs and Communications and the Ministry of Land, Infrastructure, and transport. Japan Society for the Promotion of Science (JSPS): The JSPS has initiated and carried out a vast array of programs that are essential to promoting scientific research including transport (most famous is the Grants-in-Aid for Scientific Research program or “Kakenhi” in Japanese). Japan Science and Technology Agency (JST): This is one of the core institutions responsible for the implementation of science and technology policy in Japan in all fields, including transport. It has some research projects for various fields of study including the Center of Innovation (COI) program. Universities: In Japanese universities, often the professors and other researchers establish their own research agendas. Transport is often in these agendas.

In addition, there are a variety of think tanks and consulting companies that are involved in transportation research and creation of innovation. The private sector and more particularly the auto industry’s large corporations obviously have their own research programs with their funding being much greater than that of the government’s. They also contribute to the development of transportation RTD&I policy. Japanese car manufacturing companies often lead the way with their pioneering innovations in the automotive industry especially in the field of electronics, robotics, and material research to take just a few examples. Of the 15 global market leaders in the electrical engineering and electronics sector 6 are Japanese; there are also 3 Japanese out of the top 10 companies worldwide, in the automotive industry. In recent years, Japanese companies have been actively developing and expanding research centers to boost their innovation processes.

37. For more details, see: Munro J.F., Chapter 4 in Giannopoulos (2018). 38. For example, CART—the Committee on Advanced Road Technology—is its planning and research body related to road transportation.

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The Japanese research and innovation investments in the United States, like those mentioned in our Case Study VIII, are quite indicative of the policies followed by all major Japanese auto manufacturers. The role of Japan’s private sector in developing and maintaining innovation ecosystems is very pronounced. Despite the pivotal role of the Japanese government in setting its own innovation policies and priorities, the vast number of Japan’s innovations are generated by its private sector and its needs and priorities. Japanese transport innovation, in particular, is primarily due to the large Japanese car manufacturers and their related original equipment manufacturers (OEMs). Japanese car manufacturers maintain a world market-leading position in the introduction of “smart car” technology. The following are examples of leading Japanese private sector innovators in the field of transport. They are mentioned as indicative of a wider trend that is characteristic of Japanese private sector involvement in transport innovation production at world scale: l

l

l

l

l

Fuji Heavy Industries, a subsidiary of Subaru developed its EyeSight technological innovation—introduced in 2010— and uses it on most of its models for an extra price of just ¥100,000 ($890). That move helped it to boost sales volumes by 64%. The company is a relatively small market player, but continues to move ahead of its competitors. Even in a mature car market like Japan, commercial technological advances that improve safety are clearly in demand. Fuji also has an Active Lane Keep system, which automatically steers vehicles to the middle of the lane when they are going faster than 40 mph. It’s likely to stay ahead of competitors, since it uses reasonably priced stereo cameras in its systems, instead of the high-priced sensors that other car makers are using. Nissan Motor has announced an “ambitious” schedule for developing autonomous-vehicle technology. It has already introduced its ProPilot single-lane self-drive system for expressways on its Serena minivan, which is extremely popular in Asia. Sales of the new version are up 34% compared to the previous generation. The company now plans to install ProPilot in QX50 SUVs and its electric Leaf models, as well as the Qashqai SUV for the European market. Next is the multilane self-driving technology, involving lane changes, with the biggest test—urban road self-drive cars—due for 2020. Toyota Motor (TM) holds the technological lead, to fit its market-leading position. Together with its OEMs, TM has the highest number of patents for car-related innovations, in the world. Then, also Japanese, Honda and Nissan are not far behind. Toyota’s outsized insistence on safety is somewhat slowing its innovation progress but nevertheless it is one of the biggest innovators in the field of transport around the world. Honda Motor has an RTD “Center X” that focuses on robot technology, mobility systems, and energy management. It collaborates with third parties such as Waymo, the self-drive RTD subsidiary of Alphabet (subsidiary of Google) and others. Nissan is also partnering to advance innovation. It has alliances with suppliers such as Hitachi as well as Microsoft and even NASA (McMillian, 2017).39

Korea South Korea’s research and innovation governance system is basically a “market-led” system. Its governance structure is dominated by the Ministry of Science, ICT, and Future Planning (MSIP) which handles overall research projects, with an average budget per project around 430 million KRW40 ($385,000) but large multinational companies of the private sector are free to develop their own research and innovation ecosystems often following their own commercial and financial interests. The Ministry of Trade, Industry, and Energy (MOTIE) is also a major research funding source which mostly carries out item-specific research projects with an average budget per project around 0.5–1 billion KRW ($450,000–$ 900,000). Basic or pure research funding accounted for 17.6% of the total public research funding in 2014 while “development specific”41 research accounted for 63.4% and “application specific”42 for 18.9%. In the transport sector, the corresponding figures were: 6.2% for “pure,” 69.3% for “development,” and 24.6% for “application.”

39. Many other partnerships between the United States and Japanese automakers can be mentioned, some of them expanding to compete with Silicon Valley. Ford and Toyota formed the SmartData Link (SDL) consortium to develop applications that would integrate phones with automobile infotainment systems. Recently, Mazda, PSA Group, Fuji Heavy Industries, and Suzuki joined the group (Lardinois, 2017). 40. The South Korean currency, also known as Won. 41. Meaning, research that focused on the development of “prototype” technologies or systems. 42. Meaning, research that focused on the application of known technologies and systems.

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(they

(major industrial corporations)

FIG. 4.6 Organization and structure of the Korean RTD&I governance (simplified).

Fig. 4.6 shows a simplistic and diagrammatic representation of the Korean RTD&I system of governance and its key players.43 In the field of transport, RTD&I projects are usually large-scale system-wide research projects carried out by large research groups for about 5 years. They are mostly assigned by the Ministry of Land Infrastructure and Transport (MOLIT). Under these projects, technologies are developed across the entire cycle from design to procurement, construction, and operation as well as the verification process of these technologies (pilot applications), thus requiring large investments and prolonged research periods. The MOLIT projects are divided into nine broad areas including construction, water resources, urban development and housing, railway, aviation, etc. and six policy areas including basic and creative research, commercialization and result utilization, localization, etc. The RTD&I projects in the field of transport are supervised by the MOLIT and are implemented by several administration divisions as illustrated in Table 4.6. The main division for the transport area is the Future strategy division. Overall coordination and planning is performed by the so-called Future Technology Committee. The Future Technology Committee is composed of the first Vice Minister of the MOLIT, commissioners from the private sector and others. It reviews and decides on key issues such as annual RTD&I plans. Each research performing division in the MOLIT handles RTD&I policies, strategies, and budgets; manages performance; operates systems and legislations; and guides and supervises

43. Based on a similar figure in Oh et al., Chapter 5 in Giannopoulos (2018).

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TABLE 4.6 The Research Areas and Related Divisions Within the Korean Ministry of Land Infrastructure and Transport— MOLIT Research Area

Research Subareas

Ministry Divisions in Charge

Construction (6 Divisions)

Construction technology research

Technology policy division

Water management research

Water resources policy division

Plant research

Construction workforce, machinery and materials division

Urban construction research

Construction policy division

Residential environment research

Housing construction and supply division

Land spatial information research

National spatial information policy division

Transport logistics research

New transport development division

Railway technology research

Railway traffic safety division

Aviation safety technology development

Aviation industry division

Land transport technology promotion research

Future strategy division

Transport (9 Divisions)

Land transport technology commercialization assistance Land transport technology localization Land transport research planning Land transport research result utilization support Policy research development

Budget division

From Oh et al. Chapter 5 in Giannopoulos, G. (Ed.), 2018. Publicly funded Transport Research in the PR China, Japan and Korea: Policies, Governance and prospects for cooperation with the outside world. In: Lecture Notes in Mobility. Springer, Cham.

specialized institutes. Divisions in charge of individual projects supervise the budget compilation and implementation plans of individual projects; develop new tasks; and designate officials in charge of each task. They also establish a roadmap for each technology area and develop subtasks. Officials in charge of tasks review the RTD&I direction of individual tasks; improve relevant systems; and supervise commercialization. The current divisions in charge of RTD&I within the MOLIT are presented in Table 4.6. Under contract with the MOLIT, the Korea Agency for Infrastructure Technology Advancement (KAIA)—an agency specializing in land infrastructure and transport research—undertakes research management roles such as proposal evaluation and selection of the organizations that will execute the research, performs research audits (evaluates research performance), and makes payments to the individual research teams. Korea’s current transport research effort is based on the “Land, Infrastructure and Transport Science and Technology Promotion Act” of December 2015. A follow-up enforcement decree for transport RTD&I has detailed the provisions for transport RTD while the “Regulations on the Management of Transport RTD&I projects” issued by the MOLIT, form the blueprint under which all national transport RTD&I projects are implemented. For research in general, Korea’s national RTD&I projects are primarily based on the “Framework Act on Science and Technology” and the “Regulations on the Management, etc. of National Research and Development Projects” which is a presidential decree applied to all the national RTD&I projects. One of the provisions of the Framework Act on Science and Technology is a “Master plan for science and technology” which should be jointly formulated by relevant administrative agencies every 5 years to set national RTD&I vision and goals. The most recent such master plan is the 3rd Master plan for science and technology 2013–17 (Korean Ministry of Science, 2013). Of great interest to the Korean government seems to be the implementation of research results and creation of innovation. In this respect, the Korean government issued the decree “Measures to improve Land Infrastructure and Transport (LIT) RTD&I for the commercialization of research results” in April 2015 and also the “Mid and Long-term LIT RTD&I

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strategies (2014–23)” (MOLIT, 2015). It is characteristic that for both documents the main aim was to promote the “happiness of the people and realize a creative economy” while in the second, 4 specific strategies and 10 corresponding “key projects” were mentioned. Private sector involvement in transport innovation in Korea centers on the “Smart Car revolution” and is led by Samsung Electronics. This company has made a major commitment to the development of smart vehicles in 2016 through its acquisition of the American company Harman for $8 billion. Harman has enabled Samsung to become a major player in artificial intelligence, machine vision, and autonomous mobility, as well as high-performance computing and functional safety. Samsung’s goal is to connect all aspects of life including cars, houses, and personal devices (Palenchar, 2018). Samsung is also heavily involved in testing “smart car parts” and its proprietary algorithm, which performs particularly well in bad weather.

Australia Australia displays a mixed or hybrid RTD&I governance and organization system which is basically market led. Science and research policy advice is provided by the Prime Minister’s Science Engineering and Innovation Council with key inputs from several government departments with key ones the Department of Innovation, Industry, Science, and Research (IISR) and the Department of Education and Training. Also, the Chief Scientist, the Innovation Australia, and the Industry Innovation Councils play key roles. The Australian Government supports innovation by investing in education, science, research, and infrastructure; incentivizing business investment; and removing regulatory obstacles such as restrictions around employee share ownership or access to crowd-sourced equity funding. The key policies regarding research and innovation are contained in the National Innovation and Science Agenda of the Australian government.44 This agenda is dominated by a culture of entrepreneurship and innovation giving emphasis to aligning the tax system and business laws with the promotion of innovation (i.e., provides many tax incentives for potential innovation entrepreneurs and investors). It consists of four “pillars”: a. Culture and capital, aimed at supporting SMEs to bring a new idea to the market, for example, by providing tax breaks to remove the bias against businesses that take risks and innovate, and by supporting greater private sector investment by coinvesting to commercialize promising ideas through special funds. b. Promoting collaboration, between the research producing organizations with the businesses by, for example, devoting more funding to research done in partnership with industry. c. Supporting the development of talent and skills, by promoting “new age” talents in schools (e.g., in coding and computing) and changing the visa system to attract more entrepreneurial and research talent from overseas. d. Setting the government as an example, by becoming more innovative on how it delivers services and making data openly available to the public and by making it easier for start-ups and innovative small businesses to sell technology services to government. The total governmental investment in research and development in 2015–16 was around Aus$9.7 billion ($7.2 billion) or approximately 0.4% of the national gross domestic product (GDP). Approximately Aus$3.2 billion ($2.4 billion) of this directly supported business sector RTD and much of the rest was directed to funding research in universities and research agencies.45 The overall structure of the Australian RTD&I system is shown in Fig. 4.7. The government promotes innovation by investing in traditional research infrastructures such as research laboratories, roads, rail, and digital infrastructure through the National Collaborative Research Infrastructure Strategy (NCRIS). The 2016 National Research Infrastructure Roadmap published in 2016 is expected to support future investment decisions in research infrastructures to ensure access to world class major national research infrastructures.46 The Australian private sector also invests in research and innovation production even more than the public sector. Its contribution is reaching approximately 1.7% of GDP.

44. http://innovation.gov.au/page/national-innovation-and-science-agenda-report. 45. Figures mentioned in the Australian government’s National Innovation and Science Agenda (http://innovation.gov.au/page/national-innovation-andscience-agenda-report). 46. See: http//www.education.gov.au/2016-national-research-infrastructure-roadmap (Accessed May 2018).

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Australian (Central) Government Science Engineering and Innovation Council— Chief Scientist—Innovation Australia Also, several government departments (some with key agencies with responsibilities over a number of research areas—see below)

Governmental R&D funding and/or promoting agencies (public R&D funding: 0.40% of GDP) Indicative list: Department of Broadband, Communications and the Digital Economy (DBCDE) National ICT Australia (NICTA) Department of Education and Training Department of Innovation, Industry, Science and Research (IISR)



The National Science and

 

Technology Centre IP Australia ... others

Regional governments New South Wales Queensland Tasmania South Australia Victoria Western Australia

Australian Research Council (ARC)

Excellence in Research for Australia (ERA), (National research evaluation)

Research and Innovation Performing Organisations (Public and Private) Universities Centers of Excellence (CoE) Special Research Centers (SRC).

Cooperative Research Centers (CRC) Research utilization, commercialization and technology

Research Institutions and Organizations, e.g. CSIRO (Commonwealth scientific and Industrial Research Organisation)—ARRB Group, DST Group, etc.

Private research Funding and / or Promoting agencies (Private R&D funding: 1.7% of GDP) Industry Innovation Councils

Research—related organisations (academies, associations of universities, users, societal groups) FIG. 4.7 Overall structure of the Australian RTD&I governance (simplified).

Focusing in the transport sector, the Australian Transport RTD&I production system displays a number of entities. The main ones are shown in Fig. 4.8. We refer, in more detail here, to three of these entities namely, the: l l l

Austroads Organization; ARRB Group Ltd.; and National Transport Commission (NTC).

The Austroads is the “umbrella” organization of Australasian road transport and traffic agencies having as its members all or almost these agencies. Austroads members are collectively responsible for the management of over 900,000 km of roads valued at more than AUS$200 billion ($148.7 billion) and representing the single largest community asset in Australia and New Zealand. Also, the local governments are members of Austroads through the Australian Local Government Association (ALGA) which includes all local councils in Australia and New Zealand.

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FIG. 4.8 Main Australian entities in the transport RTD&I sector.

The main output of Austroads consists of a thorough research program that addresses the priorities identified in its strategic plan and an extensive number of “Guidelines” or “Guides.” The Guides document agreed methods and processes, and provide information about new technologies and procedures related to the road and road transport industry. The Austroads Guides have covered so far the subjects of l l l l l l l l l l

Asset management Bridge technology Pavement technology Project delivery Project evaluation Road design Road safety Road transport planning Road tunnels Traffic management

Besides the above Guides, the Austroads have issued publications for cycling, environmental reporting, vehicles and turning path templates, bituminous materials sealing safety, telecommunications in road reserves: Operational guidelines for installations and also a joint publication with the NTC on assessing fitness to drive. The ARRB Group (Australian Road Research Board Group Ltd.) is a world-renowned organization that provides research, consulting, and information services to the road and transport industry for more than three decades. It applies

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research outcomes to develop innovation (e.g., equipment for road and traffic information collection, or software that assists with decision-making across road networks). The ARRB is a leading provider of transport research and innovation initiator in Australia. The NTC is an independent statutory authority focused on national reform of Australia’s road, rail, and intermodal transport networks. It contributes to the achievement of national transport policy objectives by developing regulatory and operational reform of the road, rail, and intermodal transport in Australia. It is an intergovernmental agency charged with improving the productivity, safety, and environmental performance of Australia’s road, rail, and intermodal transport. The NTC acts as an advisor to the Australian government in developing and championing national policy and legislative reform proposals including research and innovation production. Once its proposals have been approved by ministers at the Transport and Infrastructure Council they are implemented by bodies such as state and territory transport departments and agencies and other organizations (e.g., the National Heavy Vehicle Regulator or the Office of the National Rail Safety Regulator).

Israel The Israeli innovation production and support system can be considered as one of the most advanced and well-organized national system worldwide. It has produced remarkable results over the last 20 years in many fields which are documented in many publications.47 The country displays one of the highest (if not the highest) rate of research funding as a percentage of its GDP in the world (around 4.3%) and a mature web of innovation ecosystems covering many major fields of economic and scientific interest, among which transport too. In the second section of this book, in Case Study IV, we present the Israeli national innovation system of governance and organization in more detail including information and assessments based on our in situ data collection and interviews. In this chapter, we will simply present the main stakeholders of this system and their main roles. These are as follows: 1. Knesset (the unicameral national legislature of Israel) which—like any other parliament—votes the rules and proce dures under which the whole system works. 2. The Governmental Ministries that are involved in one way or another in RTD&I activities. For the transport sector, these are mainly the Ministry for Science which oversees eight major RTD centers, the Ministry of Economy, and the MOT. 3. The Israel Innovation Authority—IIA (formerly the Office of the Chief Scientist or MATIMOP). This is the main innovation monitoring and promoting authority of the Israeli government. It is an independent public entity supporting and promoting the Israeli innovation ecosystems.48 The IIA maintains the following six major “work and administration” divisions: a. Start-up Division oversees the:
Israeli Technology Incubator Program, which was established in 1991.49 Its primary goal is to promote typical “incubator work,” that is, supporting innovative technological ideas that are too risky for private investments into viable start-up companies that after the incubator term should be able to raise money from the private sector. The program also promotes RTD&I activities in peripheral and minority areas, creates investment opportunities for the private sector, and transfers technologies from research institutes to the industry.
The Early Stage program, supporting early start-ups and the Tnufa—the body giving small grants for preliminary RTD programs and assistance in locating investors and strategic partners for the implementation of research results. b. Growth Division whose primary activity is the so-called RTD Fund which supports RTD projects of Israeli com panies by offering conditional grants of up to 50% of the approved RTD expenditure. If the project is commercially successful, the company will be under an obligation to repay the grant by royalty payments. c. Technological Infrastructure Division which handles incentive programs to promote cooperation, exchange of knowledge and experience, as well as the development of generic groundbreaking knowledge. Examples of the pro grams sponsored by this division are the KAMIN, MAGNET, MAGNETON, NOFAR, etc. d. Advanced Manufacturing Division focuses on promoting the implementation of RTD&I and innovation processes in companies in the manufacturing sector.

47. See, for example, Korbet et al. (2015). 48. For more details, see: http://www.matimop.org.il (Accessed July 2018). 49. Today, the program allocates more than $1 billion per year to some 30 incubators and other similar programs that support start-ups (primarily in technology development).

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5.

6.

7.

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e. International Collaboration Division handles international cooperation and liaisons with the outside world, and f. Societal Challenges Division focuses on improving the effectiveness and quality of public sector services and enhancing social welfare and quality of life through technological innovation. Israel Academy of Sciences and Humanities. The academy is the senior body in the scientific community of Israel which promotes scientific activity through grants and funds donated to it by various donors or the government. It also advises the government on matters of research and scientific planning of national importance. Israel Science Foundation (ISF). The ISF or National Science Foundation (NSF) is Israel’s leading organization for supporting basic research. It is an independent nonprofit organization whose activities are funded primarily by the Council of Higher Education’s (CHE) Planning and Budgeting Committee (PBC) and have close ties with the Israel Academy of Sciences and Humanities, the organization that initially founded the ISF and chairs the ISF Council. Council for Higher Education (Vatat). The council, in cooperation with the ISF, supports the establishment of research performing Centers of Excellence in various diverse topics. The PBC of the council distributes funds to universities through a block-funding mechanism that awards a certain proportion of funds to research and to local and international competitive research frameworks. Key Associations and innovation promoting entities. Perhaps, the most noteworthy element of the Israeli innovation system of governance and organization is the existence of several specialized entities dedicated to coordinating, supporting and mobilizing their members, and rigorously supporting them to produce innovation. Among these entities, we note the following: a. Israeli Advanced Technologies Industries (IATI).50 This is Israel’s nonprofit umbrella organization of innovationrelated entities, that is: entrepreneurs, start-ups, incubators, accelerators, RTD centers, multinational companies, VC funds, private investors, technology transfer offices (TTOs), and service providers. The TTO in the high-tech and life science sectors that are members of IATI are key players in Israeli TT activities and form the nucleus of the ITTN Organization (see below). b. Israel Tech Transfer Organization (ITTN). The ITTN51 is a private nonprofit organization that serves as the umbrella organization for Israel’s TT companies. These companies are affiliated with the world-renowned universities and research institutions of the country to promote the transfer of research results to implementation and more generally cooperate with them on relevant issues. c. IVC Research Center (Israel Venture Capital Center). This is the organization which represents the High-Tech and Venture Capital Community.52 It represents today the leading source of information about VCs, private equity funds, as well as other sources of innovation financing in the country. The IVC also serves start-up companies by providing insight consultation on VC, private equity, and investment funding in specific industry sectors. Of greatest use is the IVC—online database53 which includes detailed listings of almost all Israeli high-tech companies, VC and private equity funds, “angels,” investment companies, technological incubators, service providers, entrepreneurs, and key executives in a virtual one-stop knowledge center. d. Intellectual property supporting organizations. IPR is a prime concern of Israeli innovation producing organizations which almost invariably obtain specialist assistance through special IP offices or third party assistance (see also Chapter 8 and Case Study IV). Israel’s domestic law is fully aligned with international intellectual property laws and conventions and there are in the country many specialized Israeli or international companies offering IPR services. e. Innovation accelerators. There is a vibrant community of “accelerators” in Israel, that is, companies that support local entrepreneurial talent by providing the platforms, mentorship services, and business opportunities for new ventures and early-stage start-ups to succeed. They normally act as innovation catalysts, organizing events and initiating projects aimed at driving entrepreneurial activity as well as providing advice and mentorship services for new ideas

50. See: http://www.iati.co.il (Accessed March 2018). 51. See: http://www.ittn.org.il (Accessed July 2018). 52. In 2017, there were some 70 venture capitals (VCs) active in Israel—more than 30% of which from abroad. According to the IVC Research Center, the proceeds from Israeli start-ups VC exits in 2015, exceeded $9 billion—up 16% from 2014 (with the average exit rising to $87 million—43% above 10-year average). According to the same source, in 2015, venture capital investment in Israel stood at $4.43 billion—the highest annual amount ever. The year 2015 was a record year for Israeli start-ups. Companies raised 373 funding rounds, garnering a total sum of $3.58 billion (counting rounds that are above $500,000). This is 69% more than the total sum of funding that was raised by start-ups in 2014, where 297 funding rounds raised a total sum of $2.2 billion. However, in the stock market, there were only 12 initial public offerings (IPOs) in 2015, which raised “only” $718.6 million and there was an overall decline in the sum raised through IPOs. 53. See: http://www.ivc-online.com (Accessed July 2018).

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and research results implementation. Many such companies exist in Israel today. Examples include: Microsoft’s Ventures, AOL’s Nautilus, Yahoo!’s SigmaLabs, 8200 EISP, Siftech (Jerusalem), RishonStartUp, HAC (Her zliya), and many others. f. Israel Innovation Institute (III). This is a nonprofit organization that encourages the development and implementation of cutting-edge solutions in the public sector. This institute focuses on developing cooperation and trust between public sector professionals, companies, entrepreneurs, and policymakers by offering opportunities to meet, learn, and work together. Its Living Labs facility enables projects to be carried out in specific fields. The institute has also established a Community in Smart Transportation (called EcoMotion), which is very active in promoting transport-related innovation through workshops, conferences, mentoring, and other services. It also has another such community in education, the Education. g. Private foundations devoted to promoting research and innovation. Israel is a unique case of active interest and involvement in the research and innovation production activities of many private benefactors (from Israel and abroad). They donate their personal estates to create foundations that support innovation. Among the most wellknown and active foundations are the:
Milstein Family (Foundation),
Eric and Sheila Samson Prize for Innovation,
The Bizrael,
The Ne’eman, and
Rothschild Foundation Fund. The transport sector is quite an important sector in several Israeli innovation eco-systems. Most of the attention is focused on two areas: “Smart transport systems” and “Alternative Fuels for Transportation.” In the area of Alternative Fuels for Transportation, the Israeli government launched in 2011 the Fuel Choices Initiative. Since then the number of research groups in this area has grown from 40 (in 2012) to about 220 (in 2016) and the number of companies in this field from fewer than 60 to about 500, with more than $2 billion worth of investments in the last 5 years (this was double the government’s target). Israel also has developed one of the most advanced models of public-private collaboration supporting the development of innovation in general and smart transportation innovation more particularly. Most Israeli start-up companies are in effect the result of public-private collaboration since they invariably use public money to start with (via one of the many active public funding initiatives). One such start-up company (which was founded in the early 2000s) was Mobileye, a company that developed one of the most advanced collision avoidance systems in the world based on a small, single-camera automotive vision system. In 2017, this company achieved the highest buy-out price when it was reportedly sold to Silicon Valley-based Intel Corporation for $15.3 billion.54 A summary of the research and innovation governance and organizational structures in several other countries around the world is given in Annex 1.

REFERENCES Carleton, T.C.W., 2013. Playbook for strategic foresight and innovation: a hands-on guide for modeling, designing, and leading your company’s next radical innovation. Helsinki: TEKES (The Finnish research and innovation funding Agency), + Lahti School of innovation, Lappeenranta University of Technology, Finland. Available from: http://www.lut.fi/documents/27578/270423/playbook-for-strategic-foresight-and-innovation.pdf/ef1d. Accessed August 2018. Chandler, C., 2017. Why China Is Emerging as a Tech Superpower to Rival the U.S. Fortune. November 21. Available from: http://fortune.com/2017/11/ 21/china-innovation-dji/ (Accessed January, 2018). Cremer, J., Schwartz, J., 2017. Volkswagen accelerates push into elecric cars wth $40 billion spending plan. Business News. Available from: https://www. reuters.com/article/us-volkswagen-investment-electric/volkswagen-accelerates-push-into-electric-cars-with-40-billion-spending-planidUSKBN1DH1M8 (Accessed July 2018). Etherington, D., 2018. Waymo orders thousands of Pacificas for 2018 self-driving fleet rollout. Techcrunch site, January 30. Available from: https:// techcrunch.com/2018/01/29/waymo-orders-thousands-of-pacificas-for-2018-self-driving-fleet-rollout/ (Accessed July 2018). European Commission, 2011. Roadmap for a single European Transport space: toward a competitive and energy efficient Transport system. European Commission, report no. COM(2011) 144, 28 March 2011, Brussels. 54. See for example, article in Computerworld by Lucas Mearian: “Why Intel is buying car-vision company Mobileye for $15.3B,” March 13, 2017, Available from: https://www.computerworld.com/article/3180164/car-tech/why-intel-is-buying-car-vision-company-mobileye-for-153b.html (Accessed July 2018).

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EUTRAIN, 2012. Deliverable D2.1, Current Practices, Characteristics and Issues in Research Collaboration. EU DG RTD, coordination action, grant agreement no. 285305, also published by ECTRI (European Conference of Transport Research Institutes at www.ectri.org), Brussels. Fiegerman, S., 2017. Uber sells 15% stake to SoftBank. CNNTech. December 28. Available from: http://money.cnn.com/2017/12/28/technology/ubersoftbank-investment/index.html?iid¼EL. Accessed June 2018. FUTRE, 2013. Deliverable D2.1: The European innovation systems in transport and the current state of the competitiveness of the EU transport sector. In: EU funded project FUTRE (FUture prospects on TRansport evolution and innovation challenges for the competitiveness of Europe), Grant Agreement no: 314181, 7th Framework Programme, Brussels. Giannopoulos, G., 2017. Strategic management and promotion issues in international transport research cooperation. Case Stud. Transport Pol. 5 (1), 9–21. See also:http://authors.elsevier.com/sd/article/S2213624X16300931. Munro, J., Giannopoulos, G., 2018. Publicly funded research and innovation in the P. R. China and the outlook for international cooperation. In: Giannopoulos, G. (Ed.), Publicly funded Transport Research in the PR China, Japan and Korea: Policies, Governance and prospects for cooperation with the outside world. In: Lecture Notes in MobilitySpringer, Cham. Korbet, R., Feldman, Y., Ravon, A., 2015. Startups and Venture Capital in Israel: Annual Report 2015. Geektime, Tel Aviv. Available from: http://www. geektime.com/2016/01/11/annual-report-2015-startups-and-venture-capital-in-israel/. Accessed June 2018. Korean Ministry of Science, 2013. ICT and Future Planning, the Third Master Plan for Science and Technology. Korean Ministry of Science, Seoul. Lambert, F., 2018. Mercedes-Benz unveils aggressive electric vehicle production plan, 6 factirues abd global battery network. Electrick, January 29th. Available from: https://electrek.co/2018/01/29/mercedes-benz-electric-vehicle-production-global-battery-network/. Accessed June 2018. Lardinois, F., 2017. Ford and Toyota launch consortium to help developers build in-car apps. TechCrunch, January 4https://techcrunch.com/2017/01/03/ ford-and-toyota-team-up-to-launch-the-smartdevice link-consortium/. Accessed February 2018. Lienert, P., 2018. Global carmakers to invest at least $90 billion in electric vehicles. Reuters. January 18. Available from: https://www.reuters.com/article/ us-autoshow-detroit-electric/global-carmakers-to-invest-at-least-90-billion-in-electric-vehicles-idUSKBN1F42NW (Accessed July 2018). McFarland, M., 2017. Ford just invested $1 billion in self-driving cars. CNN Tech. February 17. Available from: http://money.cnn.com/2017/02/10/tech nology/ford-argo-self-driving-cars/index.html?iid¼EL. Accessed December 2017. McMillian, A.F., 2017. Japanese Carmakers are Streets Ahead in Developing Self-Driving Technology. Real Money. May 4. Available from: https:// realmoney.thestreet.com/articles/05/04/2017/japanese-carmakers-are-streets-ahead-developing-self-driving-tech. Accessed February 2018. MOLIT, 2015. Analysis of Technology Levels in Land, Infrastructure and Transport Areas—An Analysis Report of Technological Competitiveness in Land, Infrastructure and Transport Areas. Ministry of Land, Infrastructure and Transport, the Korea Agency for Infrastructure Technology Advancement, Seoul. Palenchar, J., 2018. Samsung Intends to Connect Smart Homes with Cars. Twice. January 18. Available from: https://www.twice.com/product/ces-2018samsung-intends-to-connect-smart-homes-with-cars. Accessed March 2018. SSTI, 2015. The Changing Nature of U.S. Basic Research: Trends in Funding Sources. State Science & Technology Institute at SSTI site, May 28. Available from: https://ssti.org/blog/changing-nature-us-basic-research-trends-funding-sources. Accessed July 2018. Thadani, T., 2017. Foreign entrepreneurs keep coming to Silicon valley—for now. San Francisco Chronicle. June 20. Available from: https://www. sfchronicle.com/business/article/Foreign-entrepreneurs-keep-coming-to-Silicon-11231238.php. Accessed March 2018. Wiesenthal, T.C.-M., 2015. Innovation in the European transport sector: a review. Transport Pol. 42, 86–93.

FURTHER READING Christensen, B., 2011. Modularised eco-innovation in the auto industry. J. Clean. Prod. 19 (2–3), 212–220. ECTRI-TRB, 2009. European–United States Transport research collaboration. Report by the working group set up by ECTRI and TRB to report on EU-US transport research collaboration, Washington DC (TRB e-circular) and Brussels ECTRI report. Available from: www.ectri.org. European Commission, 2016. The 2016 EU Industrial RTD Investment Scoreboard. Joint Research Centre, Directorate Growth and Innovation, Brussels. Available from: http://iri.jrc.ec.europa.eu/scoreboard16.html. Accessed March 2018. K€ ohler, J.S., 2013. Leaving fossil fuels behind? An innovation system analysis of low carbon cars. J. Clean. Prod. 48, 176–186. McCuaig-Johnston, M., Zhang, M., 2015. China Institute, Occasional Paper Release—China Embarks on Major Changes in Science and Technology. Occasional Paper Series, vol. 2. University of Alberta, Alberta June 2. OECD, 2015. Frascati Manual: Proposed Standard Practice for Surveys on Research and Experimental Development, sixth ed. OECD, Paris. OECD-Eurostat, 2005. Guidelines for Collecting and Interpreting Innovation Data. In: The Oslo Manual. third ed. OECD, Paris https://doi.org/10.1787/ 9789264013100-en 10th November. Available from: http://www.oecd-ilibrary.org pp. 162. Oh, J.M.-J.-D., 2017. International Collaboration in Transport Research and its Implementation: Governance, private sector involvement, and implementation issues with focus on the Asia—Pacific: Section IV, the int’l transport research cooperation outlook for KOREA. Korean Transport Institute– KOTI, Seoul. Whitley, R., 2006. Characteristics of six ideal types of innovation systems. In: How Europe’s Economies Learn. Oxford University Press, Oxford 350 pp. Whitley, R., 2008. Business Systems and Organizational Capabilities. The Institutional Structuring of Competitive Competences. Oxford University Press, Oxford, pp. 771–784. https://doi.org/10.1093/ser/mwn017 Socioecon Rev (2008) 6(4). Published: 18 August.