TOWARDS A NATIONAL INNOVATION STRATEGY FOR COMPETITIVENESSVOLUME 1COHERENCE ON VARIOUS LEVELSApart from the dynamism and complexity of innovation, a chall<strong>en</strong>ge imposed by the analysis of thefailures of the State on the institutional design of the system is the issue of coher<strong>en</strong>ce. The OECD indicates that,based on experi<strong>en</strong>ces in the governability of innovation systems, at least three kinds of coher<strong>en</strong>ces must be<strong>en</strong>sured and coordinated:i) horizontal: referring to the integration of many policy areas, which implies <strong>en</strong>suring that the variousplayers are aligned and carry out a social control (tackles the problems of capture);ii) vertical: <strong>en</strong>suring that the creation and execution of policies are consist<strong>en</strong>t (coher<strong>en</strong>t) with theobjectives of the global Innovation Strategy (tackles the problems of ag<strong>en</strong>cy); andiii) temporal: referring, firstly, to tackling dynamic inconsist<strong>en</strong>cy, but also to <strong>en</strong>suring that the policiescreated now must continue to be effective in the future, which requires mechanisms that reveal the pot<strong>en</strong>tialincoher<strong>en</strong>ces and provide new perspectives and paths to change.As such, there is a huge institutional chall<strong>en</strong>ge that requires a reliable, transpar<strong>en</strong>t and rigorous State inorder to evaluate its interv<strong>en</strong>tions, capable of <strong>en</strong>ding or re-formulating them, either because they areineffici<strong>en</strong>t or because they are surpassed by the developm<strong>en</strong>t of the market itself; a State capable of learningfrom its errors and avoiding capture by interest groups as well as interv<strong>en</strong>tionism that is inconsist<strong>en</strong>t with themarket.THE RAISON D’ETRE OF THE INNOVATION COUNCILThe figures pres<strong>en</strong>ted in Chapter 1 are evid<strong>en</strong>ce that the National Innovation System does less than itshould regarding innovation and its inputs: the public investm<strong>en</strong>t shortfalls in R+D or in the formation of humancapital, for example, indicate dynamic inconsist<strong>en</strong>cy at a governm<strong>en</strong>t level. Meanwhile, the high proportion ofpublic sp<strong>en</strong>ding versus private R+D sp<strong>en</strong>ding (60/40) could suggest 75 problems of capture, which are alsoreflected in the lack of innovation dynamic or the weak relationship betwe<strong>en</strong> the base research c<strong>en</strong>tres and theproduction sector. Quite possibly, the problem of the quality of education, which as has be<strong>en</strong> indicated is not<strong>en</strong>tirely attributable to a problem of resources, is the area where the problems of capture (and of ag<strong>en</strong>cy) aremost evid<strong>en</strong>t.Three kinds of coher<strong>en</strong>ces must be<strong>en</strong>sured and coordinated in theinstitutional design of an innovationsystem: horizontal, vertical andtemporal. These directly tackle thethree main failures of the State:capture, problems of ag<strong>en</strong>cy anddynamic inconsist<strong>en</strong>cy, respectively.An effici<strong>en</strong>t National InnovationSystem requires a managing, guidingand coordinating institutionalstructure located at the top of thesystem.The creation of a NationalInnovation System forCompetitiv<strong>en</strong>ess is proposed, witha multidisciplinary and multisectoralcharacter that includesthe governm<strong>en</strong>t and that advisesthe Presid<strong>en</strong>t of the Republic.75 Another alternative is that the volume of public resources is so small, as indicated in Chapter 1, that it does not manage to formsuffici<strong>en</strong>t critical mass to g<strong>en</strong>erate attractive research for the private sector.101
TOWARDS A NATIONAL INNOVATION STRATEGY FOR COMPETITIVENESSVOLUME 1Thus, the urg<strong>en</strong>cy of an institutional redesign that <strong>en</strong>sures a high degree of governability and coher<strong>en</strong>ceof the system becomes pat<strong>en</strong>t. Moreover, the analysis made by the Council during 2006 reinforces the convictionthat a body is necessary to propose consist<strong>en</strong>t directions that contribute to the pertin<strong>en</strong>ce and coordination ofpro-innovation public policies, clearly separating the responsibility of proposing policies from the tasks offormulating and executing specific programs. Additionally, and most importantly, it must verify the execution ofthe policies that the Governm<strong>en</strong>t commits itself to. This body should also have: i) a level of autonomy thatallows the Council to notify any ev<strong>en</strong>tual deviations from the agreed strategy to the Governm<strong>en</strong>t, in order tocounteract any dynamic inconsist<strong>en</strong>cies of the governm<strong>en</strong>t; ii) a very good level of auditing and evaluation 76 totackle the problems of ag<strong>en</strong>cy, and iii) optimally, to not have any kind of commitm<strong>en</strong>t with private interests, totackle the dangers of capture.Best international practices show that an effici<strong>en</strong>t National Innovation System requires a managing,coordinating and guiding institutional framework at the highest levels of governm<strong>en</strong>t. This is precisely what oursystem lacks –in the opinion of external evaluators. These considerations, combined with the need to count onthe visible and perman<strong>en</strong>t commitm<strong>en</strong>t of the governm<strong>en</strong>t at the highest level, led the Council in February 2006to discard recomm<strong>en</strong>ding the option of creating a sectoral Ministry of Innovation and instead suggest creating amultidisciplinary and multi-sectoral National Council of Innovation for Competitiv<strong>en</strong>ess (that includes thegovernm<strong>en</strong>t). As an advisory body for the Presid<strong>en</strong>cy of the Republic, it should be responsible for proposing themain outlines of a long-run National Innovation Strategy that will serve as a guiding framework for the specificpublic policies and the operation of mechanisms for supporting business innovation, the formation of humancapital, sci<strong>en</strong>tific research and technology transfer.THE ROLE OF THE COUNCILBefore forming the Council, it is crucial to define the best link that a body of this type should have withthe governm<strong>en</strong>t. For this, three options have be<strong>en</strong> id<strong>en</strong>tified.A first model may be that of simply advising. In this role, the Council recomm<strong>en</strong>ds the strategic actions inthe area of innovation as an expert consultant and defines mechanisms that facilitate the coordination ofvarious actions related to innovation, <strong>en</strong>suring they are consist<strong>en</strong>t with one another. This is a model that, ev<strong>en</strong>76 The proposal is not that the Council should do the auditing and evaluations by itself, which could lead to a heavy bureaucraticmachine, but it should have the minimum capabilities needed to sub-contract those services and define and control the terms of itswork.102FIGURE 2THREE BUDGET CONSIDERATIONSThere is a cons<strong>en</strong>sus at the heart of this Councilregarding three budget aspects ess<strong>en</strong>tial for a goodperformance of the body.i) It is indisp<strong>en</strong>sable to have a minimum butautonomous budget to fulfil its functions, although thisautonomy does not imply that the implem<strong>en</strong>tation ofthese funds is not subject to evaluations, for example,through external audits.ii) One of the fundam<strong>en</strong>tal ways in which the Councilwill fulfil its evaluation tasks in the execution of theStrategy is the recomm<strong>en</strong>dation of global allocationsof the <strong>en</strong>tire public budget related to innovation, yearto year.ii) This recomm<strong>en</strong>dation will reflect the g<strong>en</strong>eralperspective of this Council and will seek to <strong>en</strong>surethat the funds allocations are adjusted to the broadlines of the strategy, but without ever <strong>en</strong>tering into thedetails of those allocations.In addition to proposing a strategyand making recomm<strong>en</strong>dations on theuse of public resources for innovation,the Council has to evaluate theimplem<strong>en</strong>tation of the strategy adoptedby the Governm<strong>en</strong>t, periodically reviewits bases and directions and, above all,caution society about wh<strong>en</strong> the systemdeviates from the objectives laid out.