THE ROLE OF R&D AND INNOVATION IN US ECONOMY AS A ...

THE ROLE OF R&D AND INNOVATION IN
US ECONOMY AS A BENCHMARK FOR TURKISH ECONOMY
Sadi Koray Demircan
Michigan State University
The Eli Broad College of Business
Master of Business Administration
East Lansing, MI 48824
Tel: (517) 353-6996
e-mail: demirca1@msu.edu

Executive Summary
This paper has been prepared in order to emphasize the role of the R&D and innovation
in the economic development. There has been reference to both innovation capacity of
US economy and some other competitive economies throughout the study. However US
economy is taken as the main benchmark since it is a developed economy that mostly
drives its power from the steady stream of scientific and technical innovations.
The term innovation has a commercial aspect different from scientific research.
Innovation has a very important role in economic development of countries, because
innovative companies, through commercializing their research and development results,
are creating new and nonexistent value. Furthermore these same companies are getting an
important share of the newly created value. By this way, they are mainly creating wealth
for themselves, for their country and for the world.
The commercialization goal under the research and development activities creates a
motive and success criteria for the innovating companies. At this point, government
organizations should try to especially motivate these companies and direct others to
innovate, because these companies are the ones which have the highest potential to create
the most wealth.
2

I. Introduction
A. Why Innovation Matters
At both the firm and national levels, competitive advantage grows out of innovation.
Firms innovate in various ways: They develop new product designs, new production
processes, new approaches to marketing, or new ways of organizing. Firms sustain
innovation (and by extension, competitive advantage) by relentless improvement. That
is, the most innovative firms engage in a continual search for better products, services,
and ways of doing things. They try to continuously upgrade their internal capabilities
and other resources. Aggregate innovative capacity of a nation is derived from the
collective innovative capacity of its firms. The more innovative firms a nation has, the
stronger that nation’s competitive advantage. Innovation also promotes productivity, the
value of the output produced by a unit of labor or capital. The more productive a
company is, the more efficiently it uses its resources. The more productive the firms in a
nation are, the more efficiently the nation uses its resources. At the national level,
productivity is a key determinant of the nation's long-run standard of living and a basic
source of national per-capita income. 1
Innovation and entrepreneurial activity are the engines of long-run economic growth.
Often, entrepreneurs first commercialize innovative new products and processes, and
entrepreneurial activity provides much of dynamism in an economy. For example, the
economy of the United States has benefited greatly from a high level of entrepreneurial
activity, which has resulted in rapid innovation in products and processes. Firms such as
Cisco Systems, Dell Computer Corporation, Microsoft, and Oracle were all founded by
entrepreneurial individuals to exploit advances in technology, and all these firms created
significant economic value by helping to commercialize innovations in products and
processes. Thus, one can conclude that if a country’s economy is to sustain long-run
growth, the business environment must be conducive to the consistent production of
1 Cavusgil, Knight & Riesenberger (forecoming in 2007), International business: strategy and managerial
skills, pg. 20-21
3

product and process innovations and to entrepreneurial activity. Innovation and
entrepreneurship require a market economy and strong property rights. Economic
freedom associated with a market economy creates great incentives for innovation and
entrepreneurship, any individual who has an innovative idea is free to try to make money
out of that idea. In addition, strong property rights give the opportunity to the individuals
and businesses to profit from innovative ideas. 2
In the next section, Turkey’s standing to different country groups have been
demonstrated on a real GDP per capita metric. GDP per capita has been used as the main
criterion in order to take out the effect of population and create a comparable basis to
analyze individual level wealth in different countries. The same metric is also commonly
used by the World Bank and World Economic Forum for analytical purposes.
B. Innovation and real GDP Per Capita Trends in the World
The below tables and figures are prepared by using the online data supplied by the Center
for International Comparisons at the University of Pennsylvania. 3 They show the trends
in the real GDP per capita over a 50 year period for different countries.
i. Turkey’s neighbors
Table 1.1 and Figure 1.1 below show the real GDP per capita trend from 1950 to 2000 for
Turkey and its neighbors. Regarding its neighbors, Turkey ranks at the second position
for most of the time in this period. In 1980 Iran takes the second ranking but it was not
able to stand in that position for a long time. The gap between the Greece and Turkey on
a percentage basis had been the lowest in 1960 when the real GDP per capita in Turkey
over real GDP per capita in Greece was 67 %. In 2000 that figure has been 48%.
2 Hill, Charles W. L. (2005), International Business, pg. 62-65
3 Center for International Comparisons at the University of Pennsylvania, retrieved 09/16/2006 from
http://pwt.econ.upenn.edu
4

Table 1.1: per capita real GDP trends (Turkey and its neighbors)
1950 1960 1970 1980 1990 2000
Armenia - - - - - 3,068
Azerbaijan - - - - - 3,555
Bulgaria - - - - - 6,356
Georgia - - - - - 5,315
Greece - 956 2,474 6,557 10,157 15,558
Iran - 489 1,044 3,027 3,840 7,202
Syria - 302 680 2,447 3,321 4,338
Turkey 340 642 1,095 2,473 5,074 7,414
Figure 1.1: per capita real GDP trend chart for Turkey and its neighbors
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
1990
1970
Armenia
Azerbaijan
Bulgaria
Georgia
Greece
Iran
Syria
Turkey
1950
ii. G-8 countries
Table 1.2, Table 1.3 and Figure 1.2 below show the trends in the real GDP per capita for
G-8 countries and Turkey’s standing compared to these countries. As we can see from
Table 1.3, G-8 countries’ relative standing to US peaked at different decades and the gap
started to increase from then on. Just as country based efforts to eliminate regional
differences for healthy development within a country, the ever increasing globalization
pace necessitates figuring out ways to eliminate the development gaps among the
different geographic parts of the world. The trend further emphasizes the US model as a
benchmark to the rest of the world. Entrepreneurial and innovative culture of the US has
5

an important role in this pace. According to Financial Times 2006 World Most
Innovative Companies ranking, 16 of the first 25 companies started doing business in
US 4 .
Table 1.2: per capita real GDP trends in absolute terms (Turkey and G-8 countries)
1950 1960 1970 1980 1990 2000
United States 1,933 2,888 5,000 12,170 23,005 35,619
Canada 1,602 2,371 4,119 11,034 19,654 28,731
Japan 412 1,103 3,579 8,903 19,431 25,924
United Kingdom 1,350 2,264 3,640 8,204 15,931 24,252
Germany - - 3,749 8,975 16,947 23,917
France 976 1,853 3,764 9,214 17,403 23,614
Italy 739 1,620 3,417 8,413 16,817 22,876
Russia - - - - - 9,996
Turkey 340 642 1,095 2,473 5,074 7,414
Table 1.3: per capita real GDP trends in relative terms (Turkey and G-8 countries)
1950 1960 1970 1980 1990 2000
United States 100 100 100 100 100 100
Canada 83 82 82 91 85 81
Japan 21 38 72 73 84 73
United Kingdom 70 78 73 67 69 68
Germany 75 74 74 67
France 51 64 75 76 76 66
Italy 38 56 68 69 73 64
Russia 28
Turkey 18 22 22 20 22 21
4 Financial Times, World’s Most Innovative Companies, retrieved 12/01/2006 from
http://www.businessweek.com/pdfs/2006/0617_top25.pdf
6

Figure 1.2: per capita real GDP trend chart for Turkey and G-8 countries
G-8 Countries
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
1980
United States
Canada
Japan
United Kingdom
Germany
France
Italy
Russia
Turkey
1950
iii. Competitive economies (Global Competitiveness Index 2006)
According to the Global Competitiveness Report, released by the world Economic Forum
on September 2006, Switzerland, Finland and Sweden are the world’s most competitive
economies. 5 Analyzing these economies reveal the importance of innovation in economic
prosperity. As shown in Figure 1.3 below, World Economic Forum categorizes the
countries into three main categories; factor driven, efficiency driven and innovation
driven.
5 World Economic Forum, Global Competitiveness Report 2006 – 2007, retrieved 11/12/2006 from
www.weforum.org
7

Figure 1.3: stage of development scale by World Economic Forum
Source: World Economic Forum (www.weforum.org)
As Figure 1.4, Figure 1.5 and 1.6 reveals Switzerland, Finland and Sweden are
innovation driven economies. One of the competitiveness dimensions is eye catching in
these figures; the innovative countries are ranking high in health and primary education
criteria. The increased human capacity through health and primary education seems to
affect the innovative capacity and rapid acceptance of the new technology in a given
economy.
Figure 1.4: stage of development (Switzerland)
Source: World Economic Forum (www.weforum.org)
8

Figure 1.5: stage of development (Finland)
Source: World Economic Forum (www.weforum.org)
Figure 1.6: stage of development (Sweden)
Source: World Economic Forum (www.weforum.org)
Table 1.4 and Figure 1.7 show the real GDP per capita trend from 1950 to 2000 for the
most competitive economies determined by the World Economic Forum in 2006 and it
shows Turkey’s standing with respect to these economies. Although Switzerland, Finland
and Sweden are among the world’s most competitive economies they are still behind the
US on a real GDP per capita metric. The third advantage of US, other than the
9

entrepreneurial culture and big market is the fast diffusion pace of new technologies that
helps the risk taking innovative companies to reach break-even sales volume quickly.
Table 1.4: per capita real GDP trends
(Turkey and the ten most competitive economies)
1950 1960 1970 1980 1990 2000
US 1,933 2,888 5,000 12,170 23,005 35,619
Switzerland - 483 1,553 6,124 14,902 28,644
Denmark 1,467 2,529 4,783 10,203 18,807 28,539
Finland 1,867 3,414 5,867 11,859 22,023 28,209
UK 412 1,103 3,579 8,903 19,431 25,924
Germany 1,168 2,161 4,051 9,344 17,182 25,759
Japan - 2,443 4,605 9,920 18,423 24,628
Netherlands 929 1,795 3,454 8,739 17,724 24,416
Singapore 1,350 2,264 3,640 8,204 15,931 24,252
Sweden - - 3,749 8,975 16,947 23,917
Turkey 340 642 1,095 2,473 5,074 7,414
Figure 1.7: per capita real GDP trend chart for Turkey and the ten most
competitive economies
40,000
35,000
30,000
25,000
20,000
15,000
10,000
US
Switzerland
Denmark
Finland
UK
Germany
Japan
Netherlands
Singapore
Sweden
Turkey
5,000
0
1950 1960 1970 1980 1990 2000
10

iv. South Korea and Taiwan
Particular attention has been given to South Korea and Taiwan because both of these two
countries had been the world’s fastest growing countries from 1970 to 2000 6 . Their
development pace proves that the gaps between the wealth level of nations can be
decreased with the economic policies giving priority to technology and innovation. It is
the tools what makes some countries more productive than the others.
Table 1.5 shows that both of these two countries had a lower real GDP per capita
compared with Turkey in 1970; but the real GDP per capita in these two countries
reached much higher levels by 2000 and they were able to decrease the gap with the US
on a percentage basis. For example the real GDP per capita in Taiwan was 17% of US in
1970, in 30 years that percentage increased to 49%.
Table 1.5: per capita real GDP trends (US, Turkey, Taiwan, and S. Korea)
1970 1980 1990 2000
Times increase
in 30 years
United States 5,000 12,170 23,005 35,619 7.12
Turkey 1,095 2,473 5,074 7,414 6.77
Taiwan* 853 3,246 9,673 17,742 20.80
S. Korea 788 2,640 8,839 14,937 18.96
* 1998 figure has been used for Taiwan
Source: Center for International Comparisons at the University of Pennsylvania
There is a focus on innovation and technology in these two countries. Although still small
when compared to the overall number of patents, the number of patents granted to
inventors from these countries has increased much more than the world average and they
are slowly emerging as potential creators of new technologies. 7 We can see from table 1.6
that the share of US patents granted to inventors from these two countries increased from
1.1% in 1990 to 5.1% by 2000.
6 Hill, Charles W. L. (2005), International Business, pg. 62-65
7 Mani, S. (September 2005) How governments can boost business R&D, Science and Development
Network, retrieved 11/15/2006 from http://www.scidev.net/scidev_images/HowGovsPBtable1.jpg
11

Table 1.6: Distribution of Patents Granted in the US
All Countries Two Asian Countries
1990 90385 957
1991 96511 1311
1992 97464 1539
1993 98342 1968
1994 101676 2336
1995 101419 2781
1996 109645 3390
1997 111984 3948
1998 147518 6359
1999 153486 7255
2000 157494 7981
Source: United States Patent and Trade Mark Office
a. South Korea
The South Korean economy has advanced rapidly since the 1950s and is now the 10th
largest (nominal value) economy in the world 8 . South Korea is also one of the world's
most technologically advanced and digitally-connected countries. It has the second
highest broadband Internet connections per capita among OECD countries 9 .
The South Korean model of encouraging the growth of large, internationally
competitive companies through easy financing and tax incentives led to the dominance
of the family-controlled conglomerates. These companies, known as chaebol, flourished
under the support of the Park regime. 10 Some such as Hyundai, Samsung and LG became
global corporations. In 2004, through all of this combined, South Korea joined in the
trillion dollar club of world economies 11 .
8 International Monetary Fund, World Economic Outlook Database, September 2006
9 BBC News, retrieved 11/15/2006 from http://news.bbc.co.uk/1/hi/technology/4903776.stm
10 Cumings, Bruce (1997), Korea's place in the sun., chapter 6
11 Korea, South, CIA World Factbook, retrieved 11/15/2006 from
https://www.cia.gov/cia/publications/factbook/geos/ks.html
12

. Taiwan 12
Taiwan’s development has been praised as an "economic miracle." Taiwan has gradually
high-teched its industries over the past two decades and currently has the fourth largest
information hardware and semiconductor industries in the world. Innovative, highquality
"Made in Taiwan" products are sold worldwide. In January 2002, Taiwan joined
the World Trade Organization (WTO), becoming an official partner in the world trading
system. Today, the government is vigorously promoting a knowledge-based economy
and industrial modernization to transform Taiwan into a "green silicon island" of high
value-added production.
These two countries exemplify how high value adding activities prosper economies.
Their strong economical relations with the US have an important role in the technology
transfer and economic policy making of these two countries.
The following two sections summarize the National Innovation System of Turkey and US
in order to highlight the similarities and differences. The summaries are prepared by
using mainly the European Trendchart on Innovation and to a lesser extent other online
sources. The European TrendChart on Innovation is an initiative of the European
Commission, Enterprise & Industry Directorate General, Innovation Policy Development
unit.
12 Asianinfo, retrieved 12/1/2006 from http://www.asianinfo.org/asianinfo/taiwan/pro-economy.htm
13

II. The National Innovation System of Turkey 13
The main challenge Turkey is facing is to develop a sustainable growth economy fuelled
by innovation in a competitive private sector. In connection with the main challenge, the
following are the specific challenges facing innovation policy in Turkey.
• Intensifying cooperation between public sector, private sector and research
community
• Stimulating the creation of start-ups and new technology-based firms
• Commercializing research results
• Strengthening national and international linkages of research activities
According to World Bank’s scorecard on innovation variables Turkey performs well in
the science and engineering enrolment ratio, however both private sector’s spending on
R&D and high-tech exports as percent of manufacturing is low. According to the
European Innovation Scoreboard 2004, Turkey is one of the lowest-ranking countries in
most of the innovation indicators. However, in terms of the trends in the areas of
innovation performance, the country is in the “catching up” quadrant. In addition,
according to the European Trendchart shown in Figure 2.1, there is a high demand
potential for innovative products in Turkey.
13 European Commission, Annual Innovation Policy Trends and Appraisal Report Turkey (2004-2005),
retrieved 10/16/2006 from http://trendchart.cordis.lu
14

Figure 2.1: Typology on Innovation
Source: European Commission
Recent Developments in Turkey and EU
At its meeting in September 2004, Supreme Council of Science and Technology (BTYK)
decided to create the “Turkish Research Area” (TARAL) as a platform for the private and
public R&D sectors and the non-governmental organizations to collaborate in R&D
issues. The Scientific and Research Council of Turkey (TUBITAK) is responsible for
effective functioning of TARAL and its integration with the European Research Area
(ERA).
The creation of ERA was proposed by the European Commission in January 2000 in its
communication "Towards a European Research Area". The main aim of this
communication is “…to contribute to the creation of better overall framework conditions
15

for Research and innovation in Europe" as stated by the time Commissioner Busquin in
the communication's preface.
Barcelona European Council (2002) set the target of bringing EU research spending up to
the levels of United States and Japan. Reaching that target requires concerted efforts by
business and public authorities. Above all, governments need to improve the business
environment to favor industrial innovation. The target set in Barcelona is to increase
spending on research and development to 3% of gross domestic product (GDP) by 2010.
As highlighted in Figure 2.2 the R&D spending of EU in 2002 reached 1.28% of GDP. In
comparison, R&D investment accounted for 2.04% of the GDP in US, and 2.11% of the
GDP in Japan.
Figure 2.2: Business R&D investment (2002)
Source: European Innovation Scoreboard (2002)
Since September 2004, the Turkish Government started to attach more importance to
R&D and allocated higher resources to approach the Barcelona target. The R&D
spending of Turkey in 2002 accounted for 0.66% of the GDP 14 .
14 Shackelford B. (2006, January), US R&D continues to rebound in 2004, retrieved 11/06/2006 from
National Science Foundation website at http://www.nsf.gov/statistics/infbrief/nsf06306/nsf06306.pdf
16

The ratio of R&D expenditures over the GDP is an indicator of a nation’s commitment to
R&D activities compared with the other activities in the economy. According to the
Figure 2.3 below, R&D share of gross domestic product has been highest for Israel,
Sweden and Finland between the years 2000-2003. In addition, there is a high correlation
between R&D share of gross domestic product and national competitiveness index; the
countries that are ranking high in national competitiveness index are also the countries
ranking high in their spending in R&D share of gross domestic product.
Figure 3: R&D Share of Gross Domestic Product, by country/economy: (2000-03)
Source: National Science Foundation
Supreme Council of Science and Technology (BTYK):
Supreme Council for Science and Technology (SCST) was founded with the Decree Law
No. 77, dated 4 October 1983. The tasks of the Council designated by the law are;
implementation of the Turkish Science Policy, assisting the government in determination
17

of long termed S&T policies, identification of targets, elaboration of plans and programs,
assignment of public organs, establishment of collaboration with private establishments,
elaboration of required laws and legislation, provision of human resources development
for researches, implementation of measures for establishment of research centers,
determination of fields of research and provision of coordination services.
Supreme Council for Science and Technology is chaired by the Prime Minister and
composed of related Ministers of State, National Defense, Economy, National Education,
Health, Forestry and Rural Affairs, Industry and Trade, Energy and Natural Resources,
Chairman of Council of Higher Education, Undersecretary of State Planning
Organization, Undersecretaries of Treasury and Foreign Trade, President of TUBITAK
and a Vice President, Chairman of Turkish Atomic Energy Authority, General Director of
Turkish Radio and Television, Chairman of Union of Chambers and Commodity
Exchanges of Turkey, and a member to be appointed by a university to be designated by
the Council of Higher Education. 15
TUBITAK (The Scientific and Technological Research Council of Turkey)
TUBITAK is the public agency put in charge of promoting,
developing, organizing, conducting and coordinating research and development
in line with the national targets of economical development and technical
progress.
TUBITAK acts as an advisory agency to the Turkish Government on science and
research issues, and is the secretariat of the Supreme Council of Science
and Technology, the highest S&T policy making body in Turkey. Approximately
1000 researchers work in 15 different research institutes of TUBITAK where
targeted, nation-wide important research is conducted. Furthermore, TUBITAK
funds research projects carried out in universities and other public and
15 Supreme Council for Science and Technology, retrieved 11/07/2006 from
http://www.tubitak.gov.tr/english/policy/btyk.htm
18

private organizations, publish scientific journals, popular science
magazines and books, and supports undergraduate and graduate students
through scholarships.
TUBITAK is the executing agency in deployment of international scientific
and technological agreements. In this context, TUBITAK is the national
coordinating body of EU's 6th Framework Program. 16
State Planning Organization (SPO)
The planned-development approach has been adopted in Turkey since 1960 and the State
Planning Organization was established to prepare the national development plans and
coordinate achievement of the goals designated by the plans. Since 1960s, the planning
system of Turkey has been comprised of five-year development plans, and in order to
implement such plans annual programs and investment programs are formed which
defines the annual goals and policies.
The “Long-Term Strategy (2001-2023) and Ninth Five-Year Development Plan (2007-
2013)” constitutes the basic framework of social and economic development in Turkey. 17
In the Ninth Five-Year Development Plan the importance of economic competitiveness
and innovation is further emphasized.
The co-ordination and the catalytic role of the agencies for innovation at national level
are carried out by the SPO. Also some funding for research activities in universities and
research institutes is provided by the organization. The 2004 Economy Congress of
Turkey was organized by the SPO on 5-9 May 2004, involving the related governmental
bodies, NGOs, the business community and academia. The report of the Science and
Technology Policies Working Group of the Congress covers policy recommendations.
The Final Statement of the Congress presented by the Deputy Prime Minister emphasizes
16 The Scientific & Technological Research Council of Turkey, retrieved 11/07/2006 from
http://www.tubitak.gov.tr/english/about/index.htm
17 State Planning Organization of Turkey, Retrieved 11/072006 from www.dpt.gov.tr
19

the importance of creating an innovation environment. Some 2500 people, more than half
of whom represented the business community and NGOs, attended the Congress.
Other Government and Legislative Bodies
Turkey has relatively well structured government institutions in the NIS at national level.
The most important shortcoming of the system is not having regional bodies for policy
making and implementation.
The providers of public funds for innovation (the Undersecretariat of Treasury (HM) and
Under Secretariat for Foreign Trade (DTM)) and co-ordinators of policy implementation
(Ministries of Industry and Trade (MoIT), Ministry of Finance (MoF), Ministry of
National Education (MoNE) and the Council of Higher Education (YOK)) are also major
players at government level.
Another component of the NIS is the Turkish Academy of Science (TUBA) affiliated to
the Prime Minister, and is mainly engaged in co-operation with the academia and
supporting academic research. The Turkish Patent Institute (TPE), the National
Metrology Institute (UME), the Turkish Accreditation Agency (TURKAK) and the
Turkish Standards Institute (TSE) affiliated to the MoIT are the other important actors of
the NIS. The Competition Authority, the Telecommunications Authority and the
Electricity Market Regulatory Authority are the most important regulatory bodies within
the Turkish innovation system.
Another important actor is the State Institute of Statistics (DIE) which is responsible for
providing statistical information related to R&D, innovation and industry, among others.
Private Sector Organizations and Entrepreneurship Promotion
The Entrepreneurship Development Center of the Small and Medium Size Industry
Development Organization (KOSGEB) and the Entrepreneurship Development Centers
20

established under the South-East Anatolia Project (GAP-GIDEMs) are the major
institutions promoting entrepreneurship. With the new parks, there will be 18 technology
parks (E.g. METU Technopolis, Ankara Cyberpark, Selcuk University Technopolis…)
established by the universities and research centers. In addition, there are 3 private and 12
public incubators (innovation centers for startups) as of October 2006. 18
The sectoral foreign trade companies established by DTM serve as a formal network
between SMEs. In addition, KOSGEB founded facilities (laboratories) for common use
of the private sector in most of the cities and there are two major informal private
networks (TARGET and TEKNORAMA) established by the private sector to co-operate
on research, technology development and innovation.
Knowledge Institutes and Research Centers
Universities are the main institutions to provide key knowledge and skills for innovation.
There are 78 universities in Turkey which receive 64.3 percent of Turkey’s total R&D
spending. 53 of the universities are public and the rest are private. Three-quarters of
universities have technical faculties and research centers that also provide R&D and
innovation-related services to the industry. Sixty-seven percent of the universities provide
management programmers and courses. There are 1492 faculties, institutes, higher
schools and vocational higher schools in the country. Lifelong Learning Centers which
mainly belong to regionally reputable universities all over the country provide short-term
training and certificate programmers for the participants from the business sector.
There are centers established by major universities for creating and disseminating
knowledge. Among them are the Competitiveness Forum of Sabanci University and
Turkish Industrialists’ and Businessmen’s Association (TUSIAD) and the Research
Centre for Science and Technology Policies of the Middle East Technical University.
18 Incubators in Turkey, retrieved 10/02/2006 from http://www.focusinnovation.net
21

There are nearly 90 public research institutes, most of which are not very active in
establishing linkages with the business sector: only about one dozen centers carry out
industrial R&D. EU-Turkey Business Development Centers located in three regions of
the country as well as 25 regional offices of KOSGEB provide training and consultancy
to SMEs. There are a large number of public, private and non-governmental
organizations providing consultancy and training on innovation-related matters.
Financial System
The main institutions financing innovation in the private sector include the Technology
Monitoring and Assessment Directorate of TUBITAK (TUBITAK-TIDEB), Small and
Medium Size Industry Development Organization (KOSGEB) and Technology
Development Foundation of Turkey (TTGV). TUBITAK and DPT also provide finance
for research activities in universities and research institutes. All of those institutions make
special efforts to act as an intermediary between the high level government and the
industry. They also promote establishment of linkages between the business and research
communities for innovation.
The Capital Market Board (SPK) is responsible for the development and implementation
of the regulations for venture capital and private equity, among others. Such financing
mechanisms are under-developed in Turkey. There are only eight companies making
private equity/venture capital investments with limited amount of funds, and there are no
business angels’ networks or intermediary organizations for matchmaking purposes at all.
Moreover, the mechanisms and institutions for supporting commercialization of research
results and for starting up of innovative businesses are also insufficient. Halkbank is the
major bank providing credits to SMEs and entrepreneurs. Other relevant financial
institutions include the Turk Eximbank, Development Bank of Turkey and Industrial
Development Bank of Turkey. The Credit Guarantee Fund, which was established in
partnership with related institutions including KOSGEB, TOBB and Halkbank, provides
guarantees on SME loans for facilitating risk-sharing and lending among Turkish banks.
22

Exhibit 1 shows the organizational chart for the innovation system, Exhibit 2
demonstrates a SWOT analysis of the national innovation system.
23

III. The National Innovation System of US 19
The United States takes prides in the vitality of its economy, which forms the foundation
of the high quality of life. That vitality is derived in large part from the productivity of
well-trained people and the steady stream of scientific and technical innovations they
produce. Economic studies conducted have shown that even then as much as 85% of
measured growth in US income per capita is due to technological change. 20
The U.S.’s ability to innovate has been an important source of competitive advantage and
it can be attributed to several factors including public financing of basic research through
private universities and public laboratories; strong patent rights that have encouraged the
commercialization of basic technologies into the marketplace; easily established start-up
enterprises; adaptable, flexible organizations; flexible labor markets, MBA-educated,
professional managers; and risk-taking, innovative financial markets.
The U.S., arguably the world leader in innovation, has a highly decentralized innovation
system. There is no explicit or over-arching innovation policy or a single bureaucracy
managing the entire innovation system. Instead there are various federal and state
agencies, each with their own jurisdictions and agendas, sponsoring their own innovation
programs. The strength of the U.S. innovation system lies in its ability to generate
innovations and then, relatively quickly, to commercialize them. This in turn, can be
attributed to several factors including public financing of basic research through
universities and federal laboratories; an ability to attract S&T talent from around the
world; the linkages among universities, federal laboratories and the private sector that
have been fostered over time; patent rights that provide incentives for the
commercialization of innovations; strong private sector investment in R&D; easily
established start-up enterprises; federal support for start-ups; trained managers; and welldeveloped
financial markets.
19 European Commission, European Trend Chart on Innovation, Annual Innovation Policy Trends Report
for United States, Canada, Mexico and Brazil (2005), retrieved 10/25/2006 from http://trendchart.cordis.lu
20 House Committee on Science, Rising above the Gathering Storm, Energizing and Employing America
for a Brighter Economic Future, retrieved 10/28/2006 from http://www.house.gov/science
24

The U.S. is still considered the most innovating country in the world. It scores high on
measures of innovation input (such as RD expenditure as a percentage of GDP and
number of researchers per million), innovation output (such as number of scientific
papers by American authors) and commercialization of innovation (such as number of
patents generated). However, the increased focus on innovation by the EU and the Asian
economic giants and the economic onslaught by the emerging Asian economies have led
to concerns about America’s competitiveness, and have put renewed pressure on the
innovation system. Especially one of the factors driving innovation policy in US is the
increased focus on innovation by the EU and the innovation performance of countries
such as Sweden and Finland.
In 2004, the Council on Competitiveness published the “National Innovation Initiative
Report” which highlights the innovation challenges faced by the U.S. and underscores the
need to put innovation on the national agenda and overhaul the national innovation
system. 21
U.S. offers lessons on building linkages among universities, federal laboratories and
industry; on commercialization of innovation and the fostering of entrepreneurship; and
on allowing flexibility within the innovation system such that regions can pursue their
own unique competitive advantages to support area specific innovation and the
development of high-tech clusters.
All states have their own science and technology initiatives housed in several state,
regional, and local agencies. These state and federal agencies coordinate with each other
at various times and to varying degrees. However, there is no single body charged with
ensuring that efforts are synchronized. That leads to duplication of effort, which is
generally inefficient. But it creates an atmosphere of competition, both at the federal level
and across the states, which may contribute to innovativeness.
21 Council on Competitiveness, National Innovation Initiative Summit and Report,
retrieved 10/25/2006 from http://innovateamerica.org/webscr/NII_EXEC_SUM.pdf
25

In 1986 government, business, labor and higher education officials formed the Council on
Competitiveness. The goal of this new group was to leverage the U.S.’s innovative
capacity to raise living standards through job creation and productivity gains. That would
be achieved by:
• Creating national assessments on U.S. innovation capabilities, benchmarking the
U.S. against economic partners, and compiling best practices for supporting
innovation.
• Developing training programs for local leaders, academics, and business leaders.
The goal of these programs is to disseminate those innovative best practices
identified by the Council to a regional level.
• Working directly with the White House and Congress, through the
Congressional Forum on Technology & Innovation, to help set innovation policy
as well as promoting innovation issues with Congress members and
administration officials.
• The Council’s work now includes “Clusters of Innovation”, which it calls a
“leading-edge strategy for economic growth”. Council's extensive work on
clusters includes working with state and local stakeholders to create regional
development policy as well as providing the tools to regions to evaluate and
benchmark their assets. The Council is also expanding this work into the
international arena to promote increased standards of living abroad while
expanding global market opportunities for U.S. businesses.
Although decentralized, there are many agencies and organizations involved in the U.S.
innovation system. At the federal level, advice is provided to the White House by the
Office of Science and Technology Policy, and legislation is developed and passed by
various science and technology-related committees in Congress. The National Academy
of Science and the Institutes of Medicine and Engineering engage the country’s most
eminent scholars. And the National Science Foundation disburses grants. Certainly,
funding from key federal departments is used for purposes consistent with innovation,
notably the U.S. Department of Commerce (including the Small Business Administration,
26

Economic Development Administration, and the National Institute of Standards and
Technology), the Departments of Health and Human Services, Energy, Defense, the
Environmental Protection Agency, and others.
Major Characteristics of the NIS System in USA
• Very strong linkages exist among universities, industry, and the government. This
system is world-beating in its output of science and technology innovations as well as
highly skilled S&E personnel.
• The U.S. has the strongest private sector funding globally for starting and supporting
innovation firms.
• The funding for the U.S. NIS receives a great deal of federal support, but the decisionmaking
processes for funding initiatives are decentralized, largely left to individual
funding agencies, researchers, labs, states and/or universities.
• The country has a deep entrepreneurial culture, which has continued to generate new
businesses and new innovations.
The U.S. government affects research and innovation by altering the distribution of R&D
funding for different uses, and by establishing criteria for the receipt of federal monies.
Over 90 percent of the federal government’s research budget is allocated through just six
federal departments: the Department of Defense, the Department of Health and Human
Services, the Department of Energy, the National Aeronautics and Space Administration,
the National Science Foundation, and the Department of Agriculture. These agencies and
departments have a great deal of autonomy in directing their budgets. Most run their own
national laboratories, funded directly by their departments, but a majority of the funds the
organizations control are directed toward research universities. The government agencies
work most closely with a small proportion of the more than 3000 universities. Only 100
universities, two-thirds of which are private, receive over 80 percent of government funds
and account for 60 percent of all university research budgets. The NIS chart of USA is
shown in Exhibit 3.
27

Public and Private Partnership
The Bayh-Dole Act of 1980 set the groundwork for public-private partnerships in science
and technology (by allowing universities and businesses operating with federal contracts
to have exclusive control in most cases over intellectual property that is developed).
Since then other legislation has further encouraged such partnerships. For instance, the
Technology Transfer Commercialization Act of 2000 improved the ability of federal
agencies to license federally owned inventions to the private sector. Nanotechnology,
clean coal technology, and fuel-cell technology are the latest federal R&D initiatives.
There has been a steady shift in the U.S. from a public-sector focus on S&T to a privatesector
led effort. It is argued that it is the promotion of innovation through incentives by
the U.S. government, rather than direct control, that separates it from other industrialized
countries.
Key Innovation Trends
Innovation has clearly played an important role in securing the economic position of the
US. Economists estimate that half of US GDP growth over the past 50 years can be
accounted for by the productivity improvements generated by innovation. However,
while the US is still considered the most innovating country (the Global Competitiveness
Report 2003-2004 ranks it No. 1 on both the Technology and the Innovation indices) and
is a benchmark for other countries, a few recent trends have led to concerns that this
position may be under threat. For instance, while the U.S. remains near the top rank of
countries measured by R&D as a percentage of GDP, countries such as Sweden, Finland,
Israel, Japan and South Korea are ahead of it in the rankings.
Fostering an Innovation-friendly Environment
Government and business leaders are particularly concerned about waning support for
and interest in science, math, and engineering education, particularly at a graduate level.
28

R&D tax incentives have been a major component of U.S. government support for
innovation for almost 25 years.
A recent example of how the U.S. innovation environment supports new technologies has
been the growing interest in nanotechnology. While there are few companies invested in
the area, and even fewer products, there is an emerging and well-coordinated effort by
industry, academia, and government to support the new industry.
Technology transfer, cooperation and clustering for innovation
Technology transfer in the U.S. involves a range of players: universities, federal
laboratories, industry and public and private affiliated and independent R&D institutions.
In the 1980s and 90s, a range of new laws were enacted and some existing ones amended
in order to promote technology transfers from universities and federal laboratories to
industry as well as foster cooperation between federal laboratories, the government,
industry and universities.
Federal laboratories such as the National Institute of Standards and Technology (NIST),
National Institutes of Health (NIH) and the Agricultural Research Service (ARS) are the
third leg of technology development and transfer. The technologies developed by these
are largely meant for use by the private sector so there is considerable scope for
technology transfer as well as cooperation. Licensing and cooperation agreements are the
primary methods of technology transfer.
Over the years, various policies have been pursued at the national, state, regional and
local levels in order to promote entrepreneurial activity and innovation. These policies
have typically enjoyed widespread bipartisan support since they were viewed as an
important mechanism for stimulating technological spill-overs, job creation and
economic growth/development.
29

IV. Conclusions
It is the companies that should invest in innovation since they have a strong incentive
system like profit making. The innovative companies are among the most profit making
companies and the return to shareholders are much higher compared with traditional
businesses. Microsoft, Dell Computer Corporation, Oracle and Google are founded by
entrepreneurs who were closely monitoring the advances in technology and supplying the
next movement in a profitable way. The founders of these companies are all from US and
they are among the world’s 40 wealthiest people according to Forbes 2006 The World’s
Billionaires List 22 . These companies create huge wealth for themselves and to the US
economy through their suppliers, distributors, partners and employees. Shareholder letter
and annual reports of these companies reveal their underlying perspectives.
2005 annual report of Google mentions the following approach: “We are dedicated to
serving our users with the best possible experience. And launching products early –
involving users with “Labs” or “beta” versions – keeps us efficient at
innovating…Googlers know they are expected to invest time and on risky projects that
create new opportunities to serve users and build new markets…Our innovations in web
search and advertising have made our web site a top internet destination and our brand
one of the most recognized in the world…Our product development philosophy is
centered on rapid and continuous innovation, with frequent releases of early stage
products that we seek to improve with every iteration…Although we seek to obtain
patent protection for our innovations, it is possible we may not be able to protect some of
our innovations.” 23
2005 Shareholder letter of Microsoft mentions that: “Customers around the world
continue to benefit from our innovations, while our development of new technologies
will position the company for future growth…Meanwhile, we increased our annual
investment in research and development by 23 percent since 2001. Our sixth research
22
World Billionaires list 2006, retrieved 11/22/2006 from http://www.forbes.com/billionaires
23 Google Annual Report, 2005, retrieved 11/25/2006 from
http://investor.google.com/pdf/2005_Google_AnnualReport.pdf
30

facility opened last year in Bangalore, India…Growth in Server and Tools was
particularly strong, helped by rapid customer adoption of SQL Server…In the years
ahead, we believe that Microsoft will continue to succeed through innovation that
enhances customers’ digital experiences at work, at home and on the go.” 24
The risks and returns associated with innovative projects are on average higher than
mature businesses. A business friendly environment and a big market with a rapid
customer adoption of new technologies in US help innovative companies to get the
returns quickly and start working on new projects. The rapid customer adoption of new
technologies stems from the entrepreneurial and innovative culture of the US. This
culture is the biggest advantage of US; a diverse population of people with different
attributes exposes people to different thinking styles, increases individualism and
acceptance of the unused.
It is the people in a country who create value. Access to information and education are
the most important issues to increase the average human capacity in Turkey. Innovation
driven economies of Finland, Sweden and Denmark has this common aspect as
emphasized by following paragraph from the website of the World Economic Forum.
As has been the case in recent years, the Nordic countries hold prominent positions in the
rankings in 2006, with Finland (2), Sweden (3), and Denmark (4) all among the top ten
most competitive economies. The Nordic countries have been running budget surpluses
and have lower levels of public indebtedness on average than the rest of Europe. Prudent
fiscal policies have enabled governments to invest heavily in education, infrastructure
and the maintenance of a broad array of social services. Finland, Denmark and Iceland
have the best institutions in the world (ranked 1, 2 and 3, respectively) and, together with
Sweden and Norway, hold top ten ranks for health and primary education. Finland,
24 Gates Bill, Ballmer Steven A., Microsoft Shareholder letter of 2005, retrieved 11/25/2006 from
http://www.microsoft.com/msft/reports/ar05/flashversion/10k_sl_eng.html
31

Denmark and Sweden also occupy the top three positions in the higher education and
training pillar, where Finland’s top ranking is remarkable for its durability over time. 25
On the other hand, the globalization pace increases the necessity for a common language,
some East Asian countries like Singapore, Hong Kong and Taiwan are aiming fluency
both in English and their native languages. In the same way some EU countries like
Finland, Sweden and Denmark are also giving top priority to educate new generations so
that they can speak English fluently.
The first priority of the Turkish government should be to supply the country with the user
friendly and fastest internet technology. Supply by itself is not enough, people can be
encouraged to use internet by broadcasting fun ads emphasizing the benefits of access to
information at the national TV channels. TV ads would be a good choice since it enables
reaching a broader public in an effective way. This method is widely used in US, for
example national breastfeeding campaign has fun ads broadcasted through the national
TV channels 26 .
The innovative economies of Finland, Sweden and Denmark are among the countries that
have the highest internet penetration rate. 62.5% of Finland, 74.9% of Sweden and 69.4%
of Denmark are internet users; this rate is only 21.4% in Turkey by 2006. 27
Small and Medium Size Industry Development Organization (KOSGEB) is an important
organization to reach the companies. KOSGEB can manage an innovation campaign by
facilitating its already developed website. It can educate the companies about how to
innovate new products and services. Product and service innovation courses at the
business schools can set examples and “www.learner.org” is a benchmark website that
reaches a huge population around the world through its online education videos.
25 World Economic Forum, retrieved 11/25/2006 from
http://www.weforum.org/en/fp/gcr_2006-07_highlights/index.htm
26 National Breast Feeding Campaign, retrieved 11/27/2006 from the
http://www.4woman.gov/breastfeeding/index.cfmpage=adcouncil
27 Internet usage statistics, retrieved 11/27/2006 from http://www.internetworldstats.com
32

A business friendly environment and a big market with a rapid customer adoption of new
technologies in US help innovative companies. Since Turkey has a much smaller market
compared with US, the S. Korean and Taiwan models can be implemented. South Korean
model depends upon encouraging the growth of large, internationally competitive
companies through easy financing and tax incentives 28 . For example, Hyundai, Samsung
and LG became global companies targeting the world market 29 . By 2006 there are eight
S. Korean and five Taiwanese companies listed at the New York Stock Exchange
(NYSE). As a Turkish company only Turkcell Iletisim A.S. is listed at the NYSE by
2006 30 . The encouragement of internationally competitive companies created huge value
for both of these economies. Both counties had lower real per capita GDP compared with
Turkey by 1970; however they become among the world’s wealthiest countries in 30
years. Because both of these countries give top priority to technology and innovation at
the national level and by the 21 st century they started to become creators of technology.
Their close relations with US has a positive effect since US is taken as a benchmark.
The United States has a benchmark economy for the world, which forms the foundation
of the high quality of life. The development is derived in large part from scientific and
technical innovations and process improvements. The culture in US increases the
customer adoption of new technologies. 31 There are some company level cultural aspects
that foster innovation which may give some perspective that may be used at the state
level. Some cultural values to promote innovation are challenging the status quo, limiting
the fear of failure and creating an environment where people can share their ideas,
whereas social cohesion, solidarity and conflict harmonization are regarded as inhibitors
of creativity 32 . Challenging the status quo is important since it strengthens the sound
ideas and weakens the costly wrong ideas in an early stage. Fear of failure can be an
inhibiting factor for companies to engage in innovation, as long as failure is happening in
the early stages the costs are much more limited and people should be motivated to share
28 Cumings, Bruce (1997), Korea's place in the sun., chapter 6
29 Korea, South, CIA World Factbook, retrieved 11/15/2006 from
https://www.cia.gov/cia/publications/factbook/geos/ks.html
30 New York Stock Exchange, Listed Company Directory, http://www.nyse.com/about/listed/listed.html
31 European Commission, European Trend Chart on Innovation, Annual Innovation Policy Trends Report
for United States, Canada, Mexico and Brazil (2005), retrieved 10/25/2006 from http://trendchart.cordis.lu
32 Dr. Joseph Bonner, MSC 810 Class Presentation, Spring 2006
33

their ideas, otherwise potentially valuable ideas may never materialize. A cultural
standing with a positive attitude towards challenge, testing of the new ideas and
encouragement for feedback has positive effects on innovation and creation of new
technologies.
There is an important emphasis to diversity in US. There is a positive relation between
diversity and innovation. The website of the Microsoft Corporation clarifies the linkage:
“Recognizing individual backgrounds and cultural perspectives helps us understand how
they affect the way we do business today. Innovation is possible only by looking at
situations through different lenses. It is the people who bring a new and different
perspective to a problem or opportunity and the people who pursue their ideas with
passion that make truly innovative products. Without an inclusive, diverse workforce, we
cannot aspire to true innovation.” 33
Turkey’s accession to EU can be an important way to diversify its population if intra EU
mobility can be created. The diversification not only creates a more heterogonous and
individualistic culture but also increases the acceptance of the unused technologies. In
addition sound ideas stand more distinguishable with a diverse group than a homogenous
group. Social cohesion, solidarity and conflict harmonization are regarded as inhibitors of
creativity. The homogenous group is more inclined to create social cohesion, solidarity
and disregard the new ideas.
Together with a big market and rapid customer adoption of new technologies the third
macro level advantage of US comes from a business friendly environment. According to
World Bank’s ease of doing business index, US stands at the third ranking in 2006. The
top ranking economies are also ranking high both in competitiveness index and per capita
GDP ranking. It is the role of the economic units of the bureaucracy to create a business
friendly environment. The ten dimensions of the ease of doing business are given at the
World Bank managed www.doingbusiness.org website as; starting a business, dealing
33 Retrieved 11/28/2006 from
http://www.microsoft.com/about/corporatecitizenship/citizenship/diversity/inside/innovation.asp
34

with licenses, employing workers, registering property, getting credit, protecting
investors, paying taxes, trading across borders, enforcing contracts and closing a
business 34 .
The ninth development plan prepared by the Turkish State Planning organization
forecasts a per capita income of $10.100 by 2013 35 . This is an absolute target which is not
taking into account the possible developments in other parts of the world. The target can
be replaced with relative value. For example, the real per capita GDP in Turkey has been
around 20% of the US from 1950 to 2000. A relative value like reaching a real GDP per
capita of 30% of that of US in 20 years is a much better target since it takes into account
the developments in the US.
To achieve the above target, economic relations with US and other competitive
economies can be prioritized. Since there will be more perspective gaining and
technology transfer by doing business with innovative and competitive countries, it
would be better if Turkish companies are encouraged to do business with companies from
these countries. Singapore, Hong Kong, Taiwan and South Korea also have been
implementing this strategy by focusing on exports to richer industrialized nations 36 .
Targeting the wealthiest countries leads Turkish companies to closely monitor customer
trends and technological improvements in these countries.
Today EU is benchmarking innovation activities all around the world with further
emphasis to successful countries like US and Japan. All the benchmarking results are
shared through the http://cordis.europa.eu webpage. There is a focus on both competition
and collaboration by the EU, such an approach has the potential to harmonize the
development differences between the geographic regions.
34 Ease of Doing Business Index, retrieved 11/29/2006 from
http://www.doingbusiness.org/Documents/DB07Easeofdoingbusinessrankmethod.pdf
35 9 th Development Plan by the Turkish State Planning Organization, retrieved 11/29/2006 from
http://ekutup.dpt.gov.tr/plan/ix/9kalkinmaplani.pdf
36 Natana Pho-Ubol, Asian-Tigers: Workshop in Macroeconomics Course, retrieved 11/29/06 from
http://www.infra.kth.se/cesis/cesis/education/master/courses/1n1703/wp1.pdf
35

At the initial stages of the potentially profitable and totally new industries, government
spending and encouragement has an important role. For example nanotechnology is
among the latest federal R&D initiatives in the US. Government agencies participate in
the initiative by supplying budget 37 . In addition to funding research, federal support
through the National Nanotechnology Initiative (NNI) provides crucial funds for the
creation of university and government nanotechnology R&D laboratories, and helps
educate the workforce necessary for the future of nanotechnology. The NNI also plays a
key role in fostering cross-disciplinary networks and partnerships, and disseminating
information. Finally, it enables small businesses to pursue opportunities offered by
nanotechnology, and encourages all levels of business to exploit those opportunities. 38
EU is also concentrating on nanotechnology; detailed information about the newly raising
technology is shared through the www.nanoforum.org website. There are two important
research centers in Turkey dedicated to nanotechnology, one is in Bilkent University, and
the other is in Middle East Technical University. Nanotechnology is referred as the
coming new revolution that will have a huge effect on human life like the electricity and
internet, and the companies that invest in this evolving new technology will create huge
wealth for themselves and for the countries they are operating in 39 .
One of the goals of Turkish National Innovation System is to intensify the cooperation
between public sector, private sector and research community. Universities are the main
institutions to provide key knowledge and skills for innovation. There are 78 universities
in Turkey which receive 64.3 % of Turkey’s total R&D spending. There are 3000
universities in US which receive more than 80 % of US’s total R&D spending 40 .
Technology transfer in the U.S. involves a range of players: universities, federal
laboratories, industry and public and private affiliated and independent R&D institutions.
37 European Commission, European Trend Chart on Innovation, Annual Innovation Policy Trends Report
for United States, Canada, Mexico and Brazil (2005), retrieved 10/25/2006 from http://trendchart.cordis.lu
38 National Nanotechnology Initiative, retrieved 11/29/06 from
http://www.nano.gov/html/about/home_about.html
39 Yaklaşan Devrim, retrieved 11/30/2006 from http://www.nanoturk.com/yaklasan.htm
40 European Commission, Innovation Policy, retrieved 11/15/2006 from http://trendchart.cordis.lu
36

In the 1980s and 90s, a range of new laws were enacted and some existing ones amended
in order to promote technology transfers from universities and federal laboratories to
industry as well as foster cooperation between federal laboratories, the government,
industry and universities. Today very strong linkages exist among universities, industry,
and the government in the US. This system is world-beating in its output of science and
technology innovations as well as highly skilled S&E personnel. The Bayh-Dole Act of
1980 set the groundwork for public-private partnerships in science and technology (by
allowing universities and businesses operating with federal contracts to have exclusive
control in most cases over intellectual property that is developed). Since then other
legislation has further encouraged such partnerships. For instance, the Technology
Transfer Commercialization Act of 2000 improved the ability of federal agencies to
license federally owned inventions to the private sector. 41
There are nearly 90 public research institutes in Turkey, most of which are not very
active in establishing linkages with the business sector: only about one dozen centers
carry out industrial R&D. 42 Similar laws creating revenues for universities and public
research institutes can be a very strong motivation factor for public and private
cooperation.
Undersecretariat for Foreign Trade of Turkey can institutionalize the benchmarking
activities by creating a benchmarking department whose only function would be to
benchmark with the similar organizations in other countries. The department can prepare
reports, manage projects and collaborate with other organizations for mutual learning and
best practice gathering. For example, the websites of the government organizations of
149 countries responsible for foreign trade are listed in the World Trade Organization’s
website. Analyzing and watching the updates in these websites reveal a lot about the
organizational structure, working patterns and underlying approaches to technology and
innovation. For example in some countries like Denmark and Belgium the government
41 European Commission, European Trend Chart on Innovation, Annual Innovation Policy Trends Report
for United States, Canada, Mexico and Brazil (2005), retrieved 10/25/2006 from http://trendchart.cordis.lu
42 European Commission, Annual Innovation Policy Trends and Appraisal Report Turkey (2004-2005),
retrieved 10/16/2006 from http://trendchart.cordis.lu
37

organizations responsible for foreign trade and foreign affairs are united under one
organization. Both the websites of Germany - Federal Ministry of Economy and
Technology - and England - Department of Trade and Industry - share government
innovation policies with their public and with the world. For example, the related website
of England emphasizes the following points: “Welcome to the DTI’s innovation home
page. Innovation – the successful exploitation of new ideas – is the key business process
that enables UK businesses to compete effectively in the increasingly competitive global
environment. The DTI is working to stimulate a significant increase in innovation
throughout the economy. This section charts our progress, summarizes legislation,
and gives practical information for companies.” 43 In the same way, Germany’s Federal
Ministry of Economics and Technology highlights the following issues in its website:
“Germany's overall economic investment in research and development (R&D) amounts
to 2.5 % of its Gross Domestic Product, placing it in the upper third among industrialized
nations. Germany possesses an efficient infrastructure for basic and applied research and
is among the top nations for inventions. In comparison with other countries, Germany has
the potential to improve the transfer of research findings into marketable products, the
development of innovative and knowledge-intensive services and the area of education
and training.” 44 Understanding these organizations and applying the best practices will
fasten the UFT’s future integration with these organizations.
43 Department of Trade and Industry of UK, innovation home page, retrieved 11/30/2006 from
http://www.dti.gov.uk/innovation/index.html
44 Federal Ministry of Economics and Technology, Germany, retrieved 30/11/2006 from
http://www.bmwi.de/English/Navigation/technology-policy.html
38

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