TOWARDS A NATIONAL INNOVATION STRATEGY FOR COMPETITIVENESSVOLUME 1papers: a tacit knowledge that can only be transmitted through a direct interaction and in the doing with theacademic and sci<strong>en</strong>tific communities, with companies and the other ag<strong>en</strong>ts of their <strong>en</strong>vironm<strong>en</strong>t. Only wh<strong>en</strong> thistacit knowledge is applied, can the country acquire the capabilities for producing local knowledge as well asobtaining and appropriating knowledge that emerges elsewhere. Moreover, it is only through these means thatChile can wholly participate in global innovation networks.Furthermore, a significant part of the public funding for first-class basic sci<strong>en</strong>ce should respect thefreedom to choose the areas of study, because otherwise at least three threats emerge: i) the loss associated toan incomplete supply of basic knowledge required to drive the production <strong>en</strong>deavour; ii) depriving the countryof knowledge that could be ess<strong>en</strong>tial in the future ev<strong>en</strong> though today it may not seem to be so; and iii) thepossible curtailing of ideas or knowledge that appear unexpectedly during the execution of sci<strong>en</strong>tific work andthat can be valuable in areas that are not directly related to that research.However, the allocation of public funds in this area should fulfil various criteria: i) certify transpar<strong>en</strong>cy inthe supply and the excell<strong>en</strong>ce of those who receive 40 ; ii) <strong>en</strong>sure the tacit transfer of knowledge 41 ; iii)adequately foster the developm<strong>en</strong>t of a growing supply of researchers 42 ; iv) impede the occurr<strong>en</strong>ce of crosssubsidiesamong related institutions; v) <strong>en</strong>sure the tracking of the implem<strong>en</strong>tation of projects; and vi) <strong>en</strong>sureaccountability, with regard to project sp<strong>en</strong>ding and those responsible for approving it.FROM SCIENTIFIC INTEREST TO MARKET INTERESTAs progress occurs in more applied research, the underlying problems are constantly changing. Ev<strong>en</strong>though it is still limited, the possibility of exclusively appropriating the b<strong>en</strong>efits of the new knowledgeincreases. As such, norms on intellectual property begin to become relevant and it is also important (for public40 The evaluation of projects must be carried out by ag<strong>en</strong>ts with unquestionable merit and neutrality.41 The funding instrum<strong>en</strong>ts of basic sci<strong>en</strong>ce should consider what the most propitious circumstances are for the desired transfer ofknowledge to occur. Note that two failures occur simultaneously here. The lack of appropriability of tacit knowledge and theasymmetries of information on whether he who claims to possess it actually possesses it. This problem is particularly relevant ineducation, since it highlights the key significance of the cognitive and pedagogical capabilities of teachers. In other words, the needfor teachers to be well-trained, as well as the critical value of teacher evaluation, in order to overcome the problems of asymmetry ofinformation42 The asymmetries of information that occur wh<strong>en</strong> jointly evaluating s<strong>en</strong>ior and junior researchers can restrict the developm<strong>en</strong>t of newresearchers. This makes it advisable to ext<strong>en</strong>d public support to research for teams of more novel researchers. This also requiresconsidering that the parameters measured for each type of initiative be differ<strong>en</strong>t. For example: the tacit knowledge transfer capacityof a s<strong>en</strong>ior researcher cannot be evaluated on the same scale as that of a researcher who is just starting-off.As research becomes more applied, thepossibility of exclusively receiving all ofthe b<strong>en</strong>efits of the new knowledgeincreases. As such, the mechanisms thatfacilitate its appropriation start tobecome relevant, especially intellectualproperty rulesThe conv<strong>en</strong>i<strong>en</strong>ce of having demand sidesignals in applied research implies <strong>en</strong>suringthe private contribution in the whole chainof knowledge creation. This contributionmust be greater, the more that saidknowledge draws closer to a product thatcould be validated by the market.75
TOWARDS A NATIONAL INNOVATION STRATEGY FOR COMPETITIVENESSVOLUME 1funding decisions) to determine precisely how much returns the private sector can have (and as such, how muchresources should be supplied) and how much should continue to be financed by the State.At this level, not only the particular interest of sci<strong>en</strong>tists to seek certain knowledge becomes relevant,but also the demands of other ag<strong>en</strong>ts of society, such as companies, or the needs of the country. The February2006 report of this Council indicates that in this stage of the process, priority should be giv<strong>en</strong> to research thatseeks to develop knowledge which, wh<strong>en</strong> incorporated into innovative processes, provides for results thattranslate into products validated by the market and an increased competitiv<strong>en</strong>ess level for the country.All in all, the practical differ<strong>en</strong>tiation made in this docum<strong>en</strong>t with respect to basic and applied sci<strong>en</strong>cedoes not mean that this Council sees them as not linked or assumes that a researcher cannot participate in oneor the other. On the contrary, the analysis does not ignore that sci<strong>en</strong>tific activity is a continuum and thereforethe commitm<strong>en</strong>t is reinforced (expressed in February 2006) to foster the involvem<strong>en</strong>t of researchers, curr<strong>en</strong>tlylinked to free research projects, in projects with objectives declared through the linkages of the public fundingsystem of sci<strong>en</strong>tific-technological c<strong>en</strong>tres (STCs) with contestable funds (which can have some variablecompon<strong>en</strong>t that dep<strong>en</strong>ds on the relationship with the private sector) and private funding (from the demandside). This should be complem<strong>en</strong>ted with evaluation systems that reward the work of researchers in projectslinked to companies or that value, together with the publication of papers, the creation of pat<strong>en</strong>ts, lic<strong>en</strong>ses orother indicators of production pertin<strong>en</strong>ce.The demand-side signals are ess<strong>en</strong>tial in this model. Therefore, these instrum<strong>en</strong>ts should foster thepres<strong>en</strong>ce of the private sector in the <strong>en</strong>tire creation of the knowledge chain and, above all, that its pres<strong>en</strong>ceincrease as the research draws closer to a product that could be validated by the market, especially in thoseareas in which the comparative advantages that the country must exploit are revealed.Funding from the demand side can also emerge directly from this Strategy, either because of the need tocover gaps in areas that are ess<strong>en</strong>tial for innovation and competitiv<strong>en</strong>ess or that foster the developm<strong>en</strong>t of asector with a defined pot<strong>en</strong>tial. In this case, the State should incorporate controlled selectivity criteria,targeted at facilitating the developm<strong>en</strong>t of capabilities where they are required, applied to instrum<strong>en</strong>ts offunding 43 or other effici<strong>en</strong>t formulas.This forces the bodies (Councils or others) to define the allocation of public funds, they should not onlybe capable of determining the quality and pertin<strong>en</strong>ce of projects, but also to have the capabilities to estimatethe public funding that each requires.BOX 2STRESSING INTELECTUAL PROPERTYIntellectual property policies are ess<strong>en</strong>tial in theKnowledge Economy, but they require a delicate balance.From the local viewpoint, and ev<strong>en</strong> though theproblems of appropriability that reappear on variousoccasions of the innovation process are recognized, it isnecessary to be proactive in fostering the developm<strong>en</strong>t ofnorms on intellectual property. This is to guarantee thateverything that is appropriable and can lead to a pat<strong>en</strong>t orlic<strong>en</strong>se can do so. This is because as private returns exist(which implies that there is a better private willingness tofunding), the use of public funds, which could be used forother needs, will be avoided.Globally, Chile must adopt clear definitions in thismatter in international fora and trade negotiations, drivinghome the idea that the def<strong>en</strong>se of intellectual propertycannot become a threat to free competition.Nowadays, some global companies use thismechanism as a way of blocking access to new markets. Assuch, and since the State is interested in pat<strong>en</strong>ting, since itinflu<strong>en</strong>ces on others doing it later, instrum<strong>en</strong>ts that supportcompanies that begin this process in more developedmarkets should be considered.43 The creation of specific funds that are difficult to undo and that t<strong>en</strong>d to capture cli<strong>en</strong>telism is not recomm<strong>en</strong>ded.76