profitability of R&D projects is often severely constrained by structural and institutional factors, such
as infrastructure, education, and incomplete markets. One of the most constraining factors, however,
is that of political instability—it disproportionately affects investments with a long-time horizon, like
R&D.
Table 1: Policies that could affect R&D opportunities positively
|
Factors affecting the |
Policies that could affect the position of the ranked distribution positively________________ |
|
Technology |
Investment in basic science, training of researchers, improved access to knowledge |
|
Scale |
Legislative and financial support for joint R&D activities in fragmented industries; supranational cooperation_______________________________________________________________ |
|
Structure of the |
Effective anti-trust legislation to avoid monopolistic situations and patent legislation to |
|
R&D efficiency and |
Developing capacity to train researchers, improved management and organization of |
|
Adoption rate and speed |
Markets, infrastructure, credit, education, etc. |
|
Risk and uncertainty |
Political stability; clear policies on IPR, ethical standards, and other regulatory measures; capacity to predict future developments (e.g. foresight studies, scenarios)________________ |
R&D can also be self-enforcing in the sense that past R&D results and experiences may have
a positive influence on (some of) the underlying factors that shape up the portfolio of possible R&D
projects today. For example, becoming more experienced in conducting R&D increases the efficiency
and effectiveness of R&D over time, and technology adoption may become easier once consumers
and markets have become accustomed to rapid technical change. Risk and uncertainty may also be
reduced by past R&D results.
The ranking of industries by R&D intensity stands out as rather stable in cross-country
comparisons among developed countries (Freeman and Soete 1999). Despite substantially lower
levels of investment in R&D in general, industries in developing countries also comply to roughly the
same ranking (Roseboom 1999). So, across all countries, food-processing industries have relatively
low R&D intensities, while pharmaceutical industries have relatively high ones. This finding could be
explained by assuming that some of the underlying factors are more industry-specific, such as
technology base and industry structure, while other factors are more country-specific, such as scale,
R&D efficiency and effectiveness, and technology adoption rates. Risk and uncertainty could fit in
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