The Danish Model and the Globalizing Learning Economy – Lessons for developing countries



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6. Innovation and competence building

The R&D- and the education effort


The R&D figures in Table 1 show a significant increase. The public R&D spending has not increased to the same extent as the private.

The main part (in 2001, 80 %) of the private R&D expenditure consists of in-house activities.5 It is, however, interesting that nearly 60% of the external R&D is aquired from foreign firms and research organisations. Only 6% of the external R&D is purchased from Danish public research organisations.



Denmark spends a relatively high proportion of GDP on education – 8.5% compared to the OECD average of 5%. However, only 20% of the expenditure on education is on higher education. Among other countries with high total education expenditure, the corresponding share is between 25-30% (Ministry of Science and Technology, 2003).

Table 1: Denmark’s R&D spending as a proportion of GDP 1995-2005, %


Sector

1995

1997

1998

1999

2000

2001

2002

2003

2004

Private

1.05

1.19

1.33

1.42

1.51

1.65

1.75

1.77

1.69

Public

0.78

0.75

0.76

0.76

0.75

0.75

0.78

0.79

0.79

Total

1.83

1.94

2.09

2.18

2.26

2.40

2.53

2.56

2.48

Note: From 1998 there has been a change in the methods of data collection in order to include more R&D done by SMEs

Source: The Danish Institute for Studies in Research and Research Policy (2003, 2005)

Over the last two decades the number of Higher Education (HE) students has increased considerably. In 2005, 33.5% of the Danish population between 25 – 64 years had a tertiary education. The equivalent figures for Norway, Sweden and Finland were 32.6%, 29.2% and 34.6%, respectively, compared to the EU25 average of 22.8% (European Innovation Scoreboard, 2006).

Denmark has a long tradition of adult education and training. According to the European Innovation Scoreboard 2006 Denmark belongs together with Sweden, Switzerland, Island and Finland to the group of countries with the highest proportion of the population participating in life-long learning activities. In 2005, 27.6% of the Danish population aged 25-64 participated in life-long learning activities. In comparison the equivalent share in Sweden was 34.7%, while the EU25 average was only 11.0%.

Entrepreneurship and intrapreneurship


The formation of new firms, is most often analyzed either by data from Global Entrepreneurship Monitor (GEM), which basically asks the adult, working-age population about their participation in start-up of new firms, or it is analysed from statistics based upon establishment of new firms, for example using VAT-numbers. The data shows that Denmark is below the EU-15 average.

It is also of interest to note that 2004, nearly half (48%) of the new Danish businesses started within the framework of an existing firm (intrapreneurship). This is well above the 28.5% mean for all countries and just below the top-ranked Hong Kong with an intrapreneurship rate of 51%. Looking at the recent trends, there are indications of a decreasing interest among the Danish adult population to engage in intraprenurial and entrepreneurial start-ups (GEM, 2004, p.171).

Explanations of the low entrepreneurship activity in Denmark needs to take into account a combination of various factors including the country-specific production structure, unemployment rates, labour market institutions, culture, finance and supporting policies. In the Danish case, a low unemployment rate combined with an extended social benefit system implies that entrepreneurial activities motivated primarily by lack of other income possibilities are low.

Another explanation of the relatively low (and falling) rate of entrepreneurial activity may be that many Danish employees feel they have sufficient opportunities to influence their own working conditions and participate in learning and innovation activities at their existing workplaces. The study by Lorenz and Valeyre (2006) show that a relatively high share of the employees have access to some discretion and learning in their working life (see box 2 below).


Innovation and networking


According to the CIS3 survey for Denmark, 40% of innovating firms collaborated with one or more other partners in relation to their innovation activities in 1998-2000. As indicated in Table 2, nearly half of the firms (47%) collaborated with their domestic (Danish) clients and customers and 26% had collaborations with their foreign clients and customers. From a globalization perspective, it is interesting to notice that most of the foreign co-operation partners were located in the near EU/EFTA countries.

Table 2: Collaboration partners 1998-2000. % of firms with collaboration. DK


Collaboration partner

CIS3-DK

CIS3-EU

Firms within same concern

65

42

Suppliers

60

61

Clients and customers

55

50

Competitors

34

29

Consultants

46

41

Private labs and R&D firms

22

22

Universities and others higher education

29

31

Public and private non-commercial research centre

21

20

Note: CIS3-DK is based on an extended population including supplementary data from construction and selected service industries in order to fit the Danish R&D statistics. CIS3-EU is equivalent to the Eurostat dataset.

Source: The Danish Institute for Studies in Research and Research Policy (2003), CIS3-DK, Table 15 & CIS3-EU, Table 32a.

Although suppliers and customers are the most frequent collaboration partners, it is interesting to notice that around 30% of the firms state that they have collaborated with universities. This indicates an important increase compared to earlier studies. The DISKO survey carried out in the l998 found, for instance, that only 17% of the Danish firms collaborated with universities. This is consistent with the increasing private R&D (see above) expenditures.

Research institutions and university education


Within the Danish innovation system there is a diverse set of academic organizations: Universities, Governmental Research Institutes for specific sectors and areas (food, construction, environment, energy, social security, etc.), University Hospitals, Approved Technical Service Institutes6, several Centres of Tertiary Education (in Danish CVU) and Business Academies, science parks and innovation incubators. 60% of the public R&D investment is allocated to the universities, around 20% to governmental research institutes, 15% to university hospitals and the rest (around 5%) to the remaining organizations. The last couple of years a series of mergers have taken place integrating sector research institutions in universities and even merging some of the universities into bigger units.

Most of these organizations are public or semi-public. There has been an increase in the share of the institutional budgets that consists of funding for strategic purposes, programs and projects, both from public and private sources while basic funding of university level education has been reduced. Normally, the state supplies the education free of charge and is also responsible for a relatively generous system of loans and grants for the students. At the same time, it has been recognized that it is important for state-owned universities to cooperate with local interests and with labor market organizations. For engineering students, in particular, it has proved to be productive to connect their studies to concrete problems and tasks in firms and other organizations.


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