Greece: From Exit to Recovery?

3. Unlocking Growth: Innovation as a Driver of Competitiveness and Prosperity

3 Unlocking Growth Innovation as a Driver of Competitiveness and Prosperity In most statistical surveys Greece appears to perform poorly in innovation, R&D, and related activities. The European Commission Innovation Scoreboard and the INSEAD Global Innovation Index are only two of the many publications that essentially identify Greece as a below-average innovator. Most of these studies agree on the weaknesses of the country’s innovation system. All of them also identify the challenges related especially to private sector funding, linkages between entrepreneurship and researchers, and the accumulation of intellectual assets. The latter two also figure in the Eurostat data demonstrating how before the crisis (2007–08) the bulk of the shortage of in-house R&D spending could be attributed to the business community rather than to the Greek higher education system, which is solely financed under the Greek constitution via government funding, and direct government funding (see figure 3-1). The business community’s weak R&D spending is positively correlated with numerous other performance indicators, such as the low employment of scientists and low patent activity (OECD 2011c). And the Innovation Union Scoreboard (EC 2011b, 2013b) finds that Greece has below-average levels of medium- and high-tech product exports, as a percentage of all product exports, and that it has a low percentage of knowledge-intensive service exports compared with total service exports. This lackluster showing is compatible with other observations that reflect aspects of the structure of the whole economy. The World Bank’s Worldwide Governance Indicators (WGI) and the World Economic Forum’s (WEF) Global Competitiveness Report (GCR) also rank Greece clearly below the majority of developed nations, as shown in table 3-1. 85 03-2577-0 ch3.indd 85 4/30/14 1:51 PM Figure 3-1. Business Enterprise, Government, and Tertiary Institution Spending on R&D as Percentage of GDP, 2007 a Percent (total intramural R&D expenditures [GERD] by sectors of performance) Source: Eurostat. a. Country notes: China does not include Hong Kong. Business enterprise sector Government plus higher education sector 0.5 1.0 1.5 2.0 2.5 3.0 3.5 European Union 27 European Union 15 Cyprus Bulgaria Greece Poland Slovakia Latvia Romania Lithuania Turkey Croatia Malta Hungary Estonia Portugal Italy Spain Russia Norway Ireland Slovenia Czech Republic Netherlands China United Kingdom Euro Area 17 France Belgium Luxembourg Iceland Germany Austria Denmark United States South Korea Sweden Finland Japan 03-2577-0 ch3.indd 86 4/30/14 1:51 PM Table 3-1. Ranking of Greece versus Other Countries on Innovation and Governance Indexes, 2011 a Index ranking Rank among 125 countries of sample Greece Australia Austria Belgium Finland France Germany Ireland Israel Japan Portugal Spain Sweden Argentina Armenia Bahrain Botswana Brazil Bulgaria China India Indonesia Italy Peru Romania Turkey Uruguay Burkina Faso Burundi Cambodia Cameroon Honduras Kenya Nicaragua Venezuela Zambia Zimbabwe Albania Vietnam Company spending on R&D, 1–7 (best) 119 27 17 19 4 15 5 21 8 1 41 46 2 69 109 94 71 30 93 23 33 31 34 110 83 61 55 97 121 63 52 79 29 114 112 54 106 50 51 Property rights, 1–7 (best) 52 23 12 27 1 11 18 10 31 20 46 43 5 118 84 19 36 54 105 40 62 75 64 80 76 65 39 63 119 83 92 86 91 107 125 66 124 103 87 Intellectual property protection, 1–7 (best) 50 19 16 26 1 7 13 10 34 22 41 42 4 116 88 20 48 77 92 46 64 58 55 110 90 100 47 80 124 83 89 71 91 107 125 60 82 86 115 Burden of government regulation, 1–7 (best) 117 69 44 112 10 103 80 54 61 67 113 97 25 115 47 4 26 125 78 20 87 39 124 106 94 84 74 42 60 31 82 49 83 65 122 27 73 8 100 Quality of overall infrastructure, 1–7 (best) 59 37 8 17 6 3 10 50 38 13 12 22 11 97 71 19 54 94 111 65 79 75 72 95 124 34 62 117 119 70 109 82 74 105 114 86 103 67 110 Quality of the educational system, 1–7 (best) 107 12 23 6 3 32 16 11 44 34 69 89 8 78 88 29 53 102 92 49 36 41 80 114 82 86 75 111 123 62 71 115 26...