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National ICT Innovation System Study, PESTLE&SWOT Analysis-Romania

WP3 – Activity 3.4: National PESTLE & SWOT Analysis & Regional Synthesis1/86

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© FORSEE Partnership, 2011

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Table of Contents

National ICT Innovation System Study, PESTLE&SWOT Analysis-Romania

Executive Summary

1Introduction and Methodology

1.1Introduction

1.2Report methodology

2National ICT Innovation System Study

2.1Governance structure of national R&D/innovation systems

2.1.1Institutional set-up of innovation policy

2.1.2General policy considerations

2.1.3R&I policy milestones

2.1.4Main national innovation related organisations

2.2Priority setting and public policies

2.2.1R&I policies in Romania

2.2.2Main priority axis

2.3Mapping the major actors in RDI

2.3.1Overview of main actors

2.3.2R&D infrastructure

2.4The ICT Sector and the RDI Sector in National economy

2.4.1Overview of the ICT sector

2.4.2Structural aspects of Romanian economy

2.4.3Competitive aspects

2.4.4Trade and financial aspects of R&D

2.4.5Innovation in enterprises

2.4.6Other strategic trends

2.5Main components and interactions of innovation systems (barriers and drivers)

2.5.1Regulatory framework

2.5.2Venture capital and the public sector

2.5.3Links between industry and academia or links between enterprises and public research organisations

2.5.4Tax incentives for RDI

2.5.5Main sources of funding for innovation

2.6Cross cutting issues and challenges

2.6.1Human Resources

2.6.2Links between education and RDI

2.6.3Internationalization of R&D

2.6.4Future challenges

3National PESTEL and SWOT analysis

3.1Political, Economic, Social, Technological, Legal and Environmental analysis of the emerging innovation system

3.1.1Core information

3.1.2Additional information

3.2Strengths, weaknesses, threats and opportunities of/for the emerging innovation system

3.3Self assessment tool: Features of well performing national and regional research and innovation

4Conclusions

5Abbreviations, References

5.1Abbreviations

5.2References

List of Tables

Table 21. National RDI related organisations

Table 22. Existing Romanian R&D and innovation policy measures (in chronological order)

Table 23. Priorities of the National RDI Strategy

Table 24. INCDs coordination and profile

Table 25.The structure of RENITT

Table 26. The activity profile of scientific and technological parks

Table 27. ICT strategies in the implementation phase

Table 28. ICT development indicators EU27 / Romania

Table 29. ICT Profile for Romania

Table 210. Structural indicators of Romanian and EU27 economies

Table 211. Main societal challenges

Table 212. Regional RDI indicators

Table 213. Innovation aspects in 3 development regions

Table 214. Doing Business Report

Table 215. Global Competitiveness Index for Romania, 2011

Table 216. Innovation Capacity Index – Romania

Table 217. Indicators of trade

Table 218. R&D Finance

Table 219. Innovation in Romanian enterprises

Table 220. Other business indicators

Table 221. Skills-Competencies that enterprises look for

Table 222. Innovation stimulators

Table 223. Indicators for open innovation

Table 224. Strategic partnership to support innovation

Table 225. Collaboration with foreign countries

Table 226. Gross Domestic Expenditure on Research and Development (GERD) [%]

Table 227.Distribution of public funding [%]

Table 228. Employment and Science and Technology indicators

Table 229. Access and use of international knowledge

Table 230. Intellectual assets and patents

Table 231. Gaps compared with EU27

Table 31. PESTLE core information

Table 32. Investment indicators - estimated trajectory

Table 33. Comparative levels for environment indicators

Table 34. SWOT Table

Table 35. Self assessment tool

List of Figures

Figure 1. Overview of Romania’s research system governance structure

Figure 2. R&D Intensity projections for Romania, 2000-2020 [34]

Figure 3. R&D Profile for Romania, 2009 [34]

Figure 4. Percentage distribution of the National Plan budget per programmes

Figure 5. Percentage distribution of researcher by age groups

Figure 6. Romania – GDP annual growth rate

Figure 7. Romania – inflation rate

Figure 8. Romania – ICT technology expenditure [US dollar]

Figure 9. Romania – unemployment rate

Figure 10. Romania – literacy rate

Figure 11. Romania – Internet users

Executive Summary

The FORSEE initiative aims to introduce a sustainable mechanism for ICT RDI Foresight in the region, attempting to tackle the absence of a regular process applied for technological future orientation and research policy review.

The main objective of the project is to identify the shortcomings of the ICT RDI sector in the region and orchestrate the establishment of a regional collaboration network, working on ICT Foresight and exploring synergies and complementarities between research resources in the target countries. FORSEE will create a transnational structure that will design, operate, evaluate and refine the approach and tools for the implementation of national and regional Foresight exercises in the field of ICT RDI.

In Romania, the scientific research, experimental development and innovation are the main activities creating knowledge and generating the economic and social progress [1]. The National Strategy for research, development and innovation, for the period 2007-2013 and its main implementation instrument – the National RDI Plan for 2007-2013 promote and support the tight interdependency between R&D and Innovation [2].

In 2010, according to national statistics, the GERD expenses represented 0.47% of GDP (i.e. 2413.5 million lei), down 0.01 percent compared to 2009. The running expenses represented 84.7%, while capital expenditures 15.3% (with 3.4% higher than in 2009). In total research spending, as compared with 2009, the fundamental research funding increased by 0.6% (from 42.3% to 42.9%) and the applied research funding by 1.2% (from 48.8% to 50.0%). The public funds had the same share in the R&D total expenditures in 2010 as in 2009 (54.9%), while the private enterprises sources decreased by 2.5% (32.3% vs. 34.8% in 2009). Regarding the capacity of the RDI system, the National Reform Programme for 2011-2013 underlines the discrepancies against the European average on the share of researchers in total employed population (3.64‰ in Romania, compared to 9.2‰ in EU27), the share of employees in R&D activities in total employed population (5.04‰ vs. 15.5‰), the share in the total employed population of the employees involved in activities with knowledge-intensive intake (6.16% vs. 13.03%). There was registered, however, a positive trend of the investment in research infrastructure, which increased over six times in 2010 compared to 2006. Also, the share of services exports of high and medium technology in total exports is close to the European average (44.91% in Romania, 49.43% in EU27), and the share of exports of high and medium technology products in total exports is above the European average (50.14% vs. 47.36%). As a dynamic, knowledge intensive economic domain, ICT had a significant contribution to these high-tech related indicators. In this context it is worth mentioning that for the Innovation Capacity Index - a tool for assessing the potential for innovation, one out of five component pillars is the adoption and use of ICT.

The composite indicator of innovation (Summary Innovation Index - SII, 2010), conclusive for the results of the RDI system, is 0.237 for Romania compared to 0.516 in EU27, placing Romania in the group of modest innovatorsat the EU level. Nevertheless, the ANCS Report 2010 on Government Policies in the Field of Research–Development and Innovation in Romania indicate an increase rate of this indicator in the period 2006-2010 of 5.23% for Romania compared to 0.85% for EU27.

The economic crisis seriously affected the RDI sector in our country. After a notable increase from 0.45% in 2006 to 0.52% in 2008, the Gross Domestic Expenditure on Research and Development-GERD relative to the GDP went down to 0.47% in 2009. The public funding for national RDI programmes managed by the National Authority for Scientific Research (ANCS)dropped consequentlyby 27.6% in 2009 [7]. Also, approx. 30% of the research infrastructure investment planned for 2007-2009 was cancelled because of the budgetary limitations at the end of 2008 [8]. The negative consequences were evident: losses of qualified researchers in R&D institutions, especially in the National R&D institutes, weaker capacity to attract young researchers and to stop the migration of researchers abroad or towards better paid sectors, weakening of public-private partnerships [7]. In the same economic circumstances, in 2010, the public R&D expenditure increased only by 8.6% relative to 2009, getting closer to the values of 2008, but remaining still considerably lower than the funding planned in the National RDI Plan II [9].

According to the National Authority for Scientific Research, better inter-ministerial coordination of RDI policy instruments, adequacy of public funding and attractiveness of the research career are among the major challenges currently facing the RDI system [18]. Currently the RDI reformation efforts are oriented towards the priorities defined in the 2011-2013 National Reform Programme for this domain: strengthening the capacity and performance of RDI system in order to meet socio-economic needs, stimulating the RDI investment growth in the private sector, and developing the European dimension of RDI policies and programs [5].

In line with the FORSEE project methodology, the implementation process of national and regional Foresight exercisesbeginswith the context analysis per country and integration of local characteristics and views into the framework of the regional approach. The current document provides a national RDI systems study and a national PESTLE and SWOT analysis for Romania. Considering the ICT orientation of the FORSEE project, wherever appropriate the document provides ICT specific data, results and trends.

In the context of the FORSEE project, the term Innovation generically addresses the full research-development-innovation cycle, emphasizing the project focus on the implementation and exploitation of R&D results in benefit of business and industrial communities, based on collaboration and interaction between academia, technology transfer infrastructures and enterprises.

The report is structured according to template elaborated by the Task Leader-University of Macedonia, considering both to the SEE Programme Manual that stipulates that the innovation capacity can be described by the education system, the human resources (level of qualification) and the institutional framework for research and development (public and private sector, institutions, enterprises, budgets, programmes and politics) as well as the “Oslo Manual” of the OECD that provides guidance on innovation indicators and their interpretation.

Following the introductory section including the report methodology, the second section is dedicated to the study of the national RDI system, where a large area of issues are tackled, according to the report methodology: governance structure of national R&D/innovation systems, institutional set-up of innovation policy, general policy considerations, R&I policy milestones, main national innovation related organisations), priority setting and public policies (R&I policies in Romania, main priority axis, overview of main actors, R&D infrastructure), the ICT sector development (including the ICT national profile in the European context), the RDI domain assessment in terms of competitiveness and innovation potential of enterprises, main components and interactions of innovation systems (regulatory framework, venture capital, links between industry and academia, main sources of funding), cross cutting issues and challenges (human resources, links between education and RDI, international cooperation, future challenges).

The thirdsection of the document includes the PESTLE and SWOT analyses, based on facts emphasized in the previous section. The PESTLE (Political, Economic, Social, Technological, Legal, and Environmental) analysis provides a review of the country’s general environment within which the Foresight exercises will be implemented. The SWOT analysis is structured on several priority RDI clusters regarding the governance and policy system, the priority setting, public policies and actors, the sector features and cross cutting issues.The final part of this section is dedicated to the self assessment results regarding the RDI current status and its recent evolution, using a set of 25 Innovation specific statistical indicators.

The elaboration of the report was based on the review of a large number of references including national RDI policy documents, annual reports of the National Authority for Scientific Research, European policy documents, Pro-Inno Europe reports, annual ERAWATCH reports, annual World Bank “Doing Business” reports, World Economic Forum and EU competitiveness reports, national and Eurostat statistics.

The report, with the emphasis SWOT results, will be used to produce the regional common methodology and the national Foresight designs. The information collected by all national reports will be used to inform stakeholders, to map competencies and capabilities, to identify implications and strategies, and to extrapolate positive trends.

1Introduction and Methodology

1.1Introduction

According to the Governmental Ordinance no 57/2002 on scientific research and technological development, the scientific research, experimental development and innovation are the main activities creating knowledge and generating the economic and social progress [1]. As compared with the former period when the focus was put mainly on the research and development, the current 2007-2013 National RDI Strategy was build, after a nation wide Foresight exercise, with the aimof promoting and supporting the tight interdependency between R&D and innovation [2]. In line with fundamental research, applied research and experimental development activates, the document defines the innovation as “the implementation of a new or substantially improved product, service or process or a new business or marketing method, in practice, in workplace organisation or external relations”. To underline its relation with R&D, the innovation is seen as “an outcome, of which research can be one of the sources, next to other factors, such as experience, communication, marketing, etc. Therefore, a coherent innovation policy needs national horizontal coordination. The RDI Strategy sustains innovation that includes a research component, and aims for complementarities with the Structural Funds allocated for innovation, in order to articulate a national innovation system as part of the knowledge-based society”.To close the RDI loop, the technology transfer includes “all activities with or without a contractual basis, performed in order to disseminate information, to advise, to transmit knowledge, to purchase machinery and production equipment, towards the driving in the economic circuit of the research results, transformed into commercial products and services”.

This vision is reflected by the current 2007-2013 National RDI Plan – the implementation instrument of the Strategy [3].

The FORSEE initiative aims to introduce a sustainable mechanism for ICT RDI Foresight in the region, attempting to tackle the absence of a regular process applied for technological future orientation and research policy review. In the context of the FORSEE project, the term Innovation generically addresses the full research-development-innovation cycle, emphasizing the project focus on the implementation and exploitation of R&D results in benefit of business and industrial communities, based on collaboration and interaction between academia, technology transfer infrastructures and enterprises.

This report was elaborated within the WP3–Context Analysis and Taskforce Formation of the FORSEE project. Although the project orientation is on the ICT domain, the report covers the overall RDI domain at the national level. The document is structured according to template elaborated by the Task Leader-University of Macedonia, considering both the SEE Programme Manual and the “Oslo Manual” of the OECD provides guidance on innovation indicators and their interpretation.

The first part of the report (see Section 2) represents the national contribution to the Activity 3.3 –National ICT Innovation systems studies & Regional Synthesis, which is focused on identifying the institutional structure and operational organisation of innovative activities in the each country. The aim is to assess the situation in the ICT RTD sector and to map national ICT Innovation capacities as a basis of common understanding between regional stakeholders, to assist future collaboration initiatives. The outputs of this activity will be utilized during the Foresight exercise planning and implementation.

The second part of this report (Section 3) is compliant with the objectives of the Activity 3.4 –National PESTLE & SWOT Analysis & Regional Synthesis, and is based on the information provided in the first part of the report. The PESTLE (Political, Economic, Social, Technological, Legal, and Environmental) analysis provides a review of the country’s general environment within which the Foresight exercises will be implemented. The SWOT analysis is structured on several priority RDI clusters regarding the governance and policy system, the priority setting, public policies and actors, the sector features and cross cutting issues. This part ends with the presentation of the selfassessment results regarding the RDI current status and its recent evolution, using a set of 25 Innovation specific statistical indicators.

Finally the report provides some concluding remarks, a list of abbreviations used throughout the document and the list of references.

1.2Report methodology

The underlying objectives of the Greek NIS, PESLTE SWOT report in relation to the main foresight work are summarized as follows:

-to identify the main policies and implications for policy that lead to the definition of priority areas;

-to understand the development, planning and implementation of ICT/RTD policies;

-to grasp the region-specific needs for foresight by including the regional characteristics and regional goals, drivers and barriers;

-to identify the sectors, technologies and industries that should be promoted to enhance regional competitiveness and the key development trends in central social issues;

-to investigate some aspects of the innovation system central to foresight exercises, such as the design and implementation of research and innovation policies, the main orientations, the investment trends, education and training systems , key partnerships, framework conditions that promote business investments in R&D, public support to innovation etc.;