The Fraunhofer Institute for Systems and Innovation Research ISI Annual Report 2003

Transkript

1 2003 Annual Report

2 The Fraunhofer Institute for Systems and Innovation Research ISI Annual Report 2003 The Fraunhofer-Gesellschaft Internal and external views: The Fraunhofer headquarters moved into new premises in Munich in 2003 The Fraunhofer-Gesellschaft (Fraunhofer- Society) undertakes applied research of direct utility to private and public enterprise and of wide benefit to society. Its services are solicited by customers and contractual partners in industry, the service sector and public administration. The organisation also accepts commissions and funding from German federal and Länder ministries and government departments to participate in future-oriented research projects with the aim of finding innovative solutions to issues concerning the industrial economy and demands faced by society in general. At present, the Fraunhofer-Gesellschaft maintains roughly 80 research units, including 58 Fraunhofer Institutes, at over 40 different locations in Germany. A staff of some 12,700 predominantly qualified scientists and engineers work with an annual research budget of around one billion euros. Of this sum, approximately 900 million is generated through contract research. Roughly two thirds of the Fraunhofer-Gesellschaft s contract research revenue is derived from contracts with industry and from publicly financed research projects. The remaining one third is contributed by the German federal and Länder governments, as a means of enabling the Institutes to pursue more fundamental research in areas that are likely to become relevant to industry and society in five or ten years time. Affiliated Research Centres and Liaison Offices in Europe, the USA and Asia provide contact with the regions of greatest importance to future scientific progress and economic development. The organisation takes its name from Joseph von Fraunhofer ( ), the illustrious Munich researcher, inventor and entrepreneur. The Fraunhofer ISI The Fraunhofer Institute for Systems and Innovation Research ISI in Karlsruhe analyses the market potentials of technological developments and their impacts on economy, state and society. To this end the institute applies interdisciplinary analytical, evaluation and prognosis methods, such as Delphi surveys, in-depth interviews or techno-economic indicators. The Institute s interdisciplinary research groups focus their work especially on the fields of energy, environment, production, communication and biotechnology, as well as regional research and innovation policy. 2

3 Contents The important problems facing us today cannot be solved using the same intellectual approach we had when we created them (Albert Einstein) The Fraunhofer-Gesellschaft / The Fraunhofer ISI Preface by the Heads of the Fraunhofer ISI 4 Organizational Chart 7 Message from the Board of Trustees 8 Fraunhofer ISI in the International Research Market 10 Germany s Technological Performance under the Microscope 14 Impact of New Technologies on Employment 16 Innovations in Biotechnology 18 Technology Analysis and Innovation Strategies 20 Innovations in Production 22 Environmental Technology and Environmental Economics 24 Energy Technology and Energy Policy 26 Information and Communication Systems 28 Innovation Services and Regional Development 30 Services and Internal Management, Employee Survey 32 Fraunhofer ISI in Figures 33 Projects Dissertations, Habilitations, Academic Teaching 38 Imprint, Directions 39 Content of CD-ROM 40 3

4 Preface by the Heads of the Fraunhofer ISI ISI Director Frieder Meyer-Krahmer (on the right) and Hariolf Grupp (Deputy Director) With this preface we would like to introduce our readers to the annual report on the 31st year of activity at the Fraunhofer ISI. Initially, this may not sound extraordinary: while last year's report featured a long look at over 30 years of development at the Fraunhofer ISI in a constantly evolving environment with a spotlight on the special events of the anniversary year, this year we are content to report on a year of "business as usual", or so at least it would appear at first. Nevertheless, the year 2003 does indeed have its own unique character was a difficult year for Germany as a commercial location, the third year in a row with unsatisfactory economic growth. Although a year ago the corporate sector as well as the state still saw light at the end of the tunnel through which Germany has been moving for quite some time (since the German reunification), hopes for signs of renewed recovery have turned out to be in vain. Company resources for research and innovation are showing no vitality, with state funding for promotion of science lagging alongside. This national slump has not left the ISI untouched in spite of many research assignments from abroad, e.g. from the European Commission. It was possible to submit a stable, even slightly positive year-end financial statement. However, the amounts which could be carried forward to the following year as a part of integrated accounting were smaller, something which cannot be repeated every year. Additional strains arose in this difficult year as a result of increased efforts to acquire new research assignments. Composing good research proposals which are then eventually not approved due to lack of funding on the clients part is taxing in terms of time as well as morale. The higher overall workload has had several consequences. Mini-sabbaticals, foreign residencies and free time for composition of scientific publications, all urgently needed to refresh in particular senior staff members, have fallen victim to the demands of day-to-day activities. In spite of the tremendous willingness on all parts to engage and productively realise the demands of the extra workload, not all parties were affected in the same way. Some team members simply have had to bear more of the burden than others. Contractual alliances and personnel unions with universities which were emphasised in last year's report were further expanded in Two post-doctoral thesis projects (Habilitation) were successfully completed during the reporting period. Dr. sc. agr. Klaus Menrad (Economics of Agriculture, University of Hohenheim) and Dr. rer. pol. Knut Blind (Economics, University of Kassel) were awarded the rank of a Reader (Privatdozent). Our sincere congratulations on these remarkable achievements! 4

5 The summer of 2003 also saw the unfortunate loss at unusually young ages of two valued long-time employees of ISI. Uwe Kuntze passed on during the night of 15 August 2003 as a result of a serious illness. Uwe Kuntze had worked at the Fraunhofer ISI since October 15, 1973 and was as such one of the founding ISI team members. We can attribute decisive works on modern technology and innovation policies to him, as well as concepts on operational innovations and sustainable development. Uwe Kuntze gave these labours his own personal signature: straightforwardness, conscientiousness, modesty and a love of life. On September 3, 2003 our colleague Franz Pleschak, highly valued both for his human and professional qualities, passed away in Dresden after a brief and concerted struggle with his illness. Franz Pleschak had been with Fraunhofer ISI since July 1, Following the formation of the joint research centre Economics of Innovation by the Fraunhofer ISI and the TU Bergakademie Freiberg in 1994, he was instrumental as an ISI staff member for establishing and defining a specialised profile for the research centre. He completed this assignment with great success and, working together with the office's staff, made substantial contributions to the outstanding reputation of the research venture. What will the future bring? The assignment logs for 2004 are presently fuller than they were at the same point last year for ISI appears to have overcome the economic crisis more quickly than other organisations have. We therefore look forward to the new year with a certain optimism. The Board of the Fraunhofer Society has introduced new instruments for regular self-inspection of strategic deployment, such as the research audit. A first audit was conducted in ISI in January 2004, resulting recommendations are already being implemented. We shall report in detail about the audit results and measures taken in the next ISI Annual Report. This event already gives some indication of what is to come: ISI is becoming more and more "European". The audit commission staff is international and treats the situation and perspective of ISI in English language documentation. ISI is fully committed to the conception of the European Research Area (ERA) and has taken on a leading role in its realisation. Not only was it possible to fill important key positions in advisory bodies, it was also possible to acquire major integrated projects in spite of stiff competition. You will find more details in the reports from the individual departments. On the other hand, the institute was not able to contribute much to the major national debates of the year 2003 concerning tax policies, retirement pension policies and reform of the health-care system: these are not the fields of expertise of an institute dealing with innovation research. According to expectations however, this will change during There is every reason to expect that in the future innovation policy topics will be awarded a high priority, at least in Germany, a well-deserved status in the context of the modernisation of Germany as a commercial location. ISI is excellently positioned at all levels (studies, analyses, consulting, fundamental research) to provide strong support for this debate, also with regard to public relations. In terms of redeployment of public relations, this year's activity report presents a substantially modified appearance in comparison with earlier years. The description of specialised activities is less comprehensive, emphasising a small selection, resulting in a shorter and more transparent report. It would otherwise be quite difficult to present 5

6 Preface by the Heads of the Fraunhofer ISI more than a hundred clients and projects in a clear fashion. The new concept means that not all projects by all scientists can be thoroughly discussed. Therefore we would like to assure you that in addition to the activities featured in the report, much more is being provided in terms of performance, quality and professionalism. We would like to thank all team members, those mentioned in the report and especially those who go unmentioned, for their continuous and enthusiastic support. We would also like to thank our cooperation partners and clients in the public and commercial sectors, both in Germany and abroad. Without the active maintenance of an intensive collaborative network, ISI would face its tasks alone. Key questions and results must be transported with as little intellectual loss as possible. The customer satisfaction survey conducted for the first time with clients in the commercial sector has shown positive acceptance with almost no exception. Immediate action has been taken at all points where any indication of possible improvements was found. We hope our readers enjoy the report and look forward to continuing our successful cooperation in the future. With best regards from Karlsruhe, Frieder Meyer-Krahmer Hariolf Grupp Staff members 1 Bernd Müller 2 Hariolf Grupp 3 Ulrike Glutsch 4 Frieder Meyer-Krahmer 5 Susanne Ruhm 6 Monika Silbereis 7 Christiane Maisch 8 Elke Pendl 9 Julia Kusnezow 6 6

7 Organizational Chart Services and Internal Management H: Siegbert Böckle Tel.: +49 (0) 721/ D: Gernot Eich Tel.: +49 (0) 721/ Press and Public Relations C: Bernd Müller Tel.: +49 (0) 721/ Secr. Ulrike Glutsch Tel.: +49 (0) 721/ Executive Board of FhG Consult. and supervision Institute s Management Committee Information and advice Innovation Services and Regional Development H: Reader Dr. Knut Koschatzky D: Dr. Marianne Kulicke Secr. Christine Schädel Tel.: +49 (0) 721/ Director of Institute and Deputy Director Dir.:Professor Frieder Meyer-Krahmer Secr.: Christiane Maisch, Elke Pendl Tel.: +49 (0) 721/ /102 D: Professor Hariolf Grupp Secr.: Monika Silbereis Tel.: +49 (0) 721/ Board of Trustees Information and advice Cooperations with universities Université Louis Pasteur Economics of Innovation, Strasbourg C: Professor Frieder Meyer-Krahmer Tel.: 00 33/3/ University of Karlsruhe (TH), Institute for Economic Policy Research C: Professor Hariolf Grupp Tel.: +49 (0) 721/ ETH Zürich and Lausanne Centre for Energy Policy and Economics (CEPE) C: Professor Eberhard Jochem Tel.: 00 41/1/ University of Utrecht Department of Innovation Studies (DIS) C: Professor Stefan Kuhlmann Tel.: 00 31/30/ Technical University of Freiberg, joint research centre C: Professor Franz Pleschak Tel.: +49 (0) 371/ passed away on 3. Sept Innovations in Biotechnology H: Dr. Thomas Reiß D: Dr. Bärbel Hüsing Secr. Silke Just Tel.: +49 (0) 721/ Technology Analysis and Innovation Strategies H: Prof. Dr. Stefan Kuhlmann D: Reader Dr. Dr. Ulrich Schmoch Reader Dr. Dr. Knut Blind Secr. Edeltraud Geibel Tel.: +49 (0) 721/ Information and Communication Systems H: Peter Zoche M.A. D: Dr. Simone Kimpeler Secr. Irmgard Wessoleck Tel.: +49 (0) 721/ Environmental Technology and Environmental Economics H: Dr. Harald Hiessl D: Reader Dr. Rainer Walz Secr. Claudia Hertweck-Maurer Tel.: +49 (0) 721/ Innovations in Production H: Dr. Carsten Dreher D: Jürgen Wengel Dr. Steffen Kinkel Secr. Annette Walther Tel.: +49 (0) 721/ Energy Technology and Energy Policy H: Dr. Harald Bradke D: Edelgard Gruber Dr. Wolfgang Eichhammer Secr. Renate Schmitz Tel.: +49 (0) 721/ Key Dir.: Director H: Head D: Deputy Secr: Secretary C: Contact Tel.: Telephone Date: January

8 Message from the Board of Trustees I would like to use the occasion of the present Annual Report 2003 to introduce myself as the new Chairman of the Fraunhofer ISI Board of Trustees. My interests are rooted in the fields of macroeconomics and systems engineering. As a research fellow at an English university I entered into the field of regional economics, since the questions of region, indivisibility, market imperfections and of dynamic adjustment are among the most exciting challenges posed by the field of economics. As I took on a corporate executive role in the 1980s, I continued to pursue my scientific inclinations, as far as was possible. And while in the electricity industry I suddenly learned precisely how important systems engineering can be as a theoretical approach and a problem solving methodology. Dr. Stephan Bieri, chairman of the ISI Board of Trustees The Fraunhofer ISI is also concerned with such topics, among others. Accordingly, I was familiar with the institute before joining the Board of Trustees two years ago, in fact I have been acquainted with the Institute since the 1990s. At that time, as a member of the Swiss Federal Commission for Technology and Innovation (KTI), I gained direct experience of ISI expertise in perspective and evaluation. We particularly appreciated the mixture of theoretical depth and application-oriented practicality at the ISI. As CEO of the ETH domain in Switzerland, a conglomerate consisting of two technical-scientific universities and four major research facilities, I participated in the creation of an energy industry research institute whose scientific leadership is in the hands of an ISI researcher. Since I know and appreciate the ISI, I also know the opportunities and risks faced today by such institutions, walking a tightrope between scientific excellence and market-oriented realisation. The figures presented in the current Annual Report paint a positive picture of the quality of the Frauhofer ISI, but at the same time they illustrate the increasingly difficult conditions encountered in today's consulting market. In this context the Board of Trustees will carefully analyse strategic positioning and will, now and again, also assist in acquisition activities. I am sometimes referred to as being sceptical towards innovation. This is a justified observation, to the extent that I find it difficult to follow the optimism expressed by William J. Baumol in his book "The Free-Market Innovation Machine". I doubt that: the so-called "routinisation" of the innovation process is ultimately correct the passive use of technical-organisational expertise through licensing etc. will be the path out of the current slump in growth that good scientists are interested in arranged cooperative research efforts. 8

9 To avoid any misunderstanding: of course strong innovative forces are necessary for regional economies, national economies and larger economic communities to survive. But this can hardly be successful if we rely only on organisability, indulge in Best Practices and refuse to pay proper attention to supply-side profiling, to the excellence of research and development. My past experiences have shown me that it is not possible to plan for everything, that it is necessary to accept long-term risks and that success may well emerge precisely at interfaces which previously commanded only limited attention. It is also from this perspective that I much look forward to intensified collaboration with the directorate and Fraunhofer ISI researchers. Dr. Stephan Bieri Chairman of the Board of Trustees Not in photograph: Dr. Karin Benz-Overhage, Member of the Board of Directors, German Metal-worker s Union, Frankfurt Dr. Heribert Knorr, Ministry of Science, Research and Art in Baden-Württemberg, Stuttgart Prof. Dr.-Ing. Wolfgang Maßberg, Institute of Automatisation Technology, Ruhr University, Bochum Thomas Rachel, Member of the German Bundestag, Berlin 1Dr. Wolfgang Kunz, Ministry of Economic Affairs Baden-Württemberg (Deputy of Dr. Reinhard Altenmüller), Stuttgart 2Dr. Wilhelm Krull, Secretary General of the Volkswagen Foundation, Hannover 3Prof. Dr. Michael Fritsch, Faculty of Economic Science, Technical University of Freiberg, (Bergakademie) 4 Dipl.-Ing. Joachim Claus, Seeheim-Jugenheim 5Prof. Dr. Hans Günter Danielmeyer, Ottobrunn 6Prof. Frieder Meyer-Krahmer, Head of Fraunhofer ISI, Karlsruhe 7Dr. Alfred Gossner, FhG Board, responsible for Finance and Controlling, Munich 8Prof. Dr. Werner Rothengatter, Institute for Economic Policy Research, University of Karlsruhe 9Dr. Manfred Eggersdorfer, Director of Research and Development, DSM Nutritional Products, Basel 10 Prof. Patrick Llerena, Université Louis Pasteur, Strasbourg 11 Dr. Stephan Bieri, President of the Federal Swiss College/University Commission, Bern 12 Dr. Carsten Kreklau, Federation of German Industries, Berlin 13 Prof. Dr. Helmar Krupp, founder of the Institute and former Director of ISI, Weingarten

10 Fraunhofer ISI in the International Research Market Professor Stefan Kuhlmann, Professor Frieder Meyer-Krahmer and Jürgen Wengel of Fraunhofer ISI on the new European Research Area When modern "science" came into existence, even before Renaissance times, it was understood among scholars as universal knowledge production, facilitated by the "lingua franca" Latin. This changed only with the emergence of nation states during the 19th and 20th centuries: now academia and research organisations were nationally institutionalised and funded, and national scientific cultures established, most prominently in bigger nations. Today, we are witnessing a new turn towards a transnational, universal science culture, not least driven by the globalisation of science-based technology markets: many studies by ISI and others have shown that industrial research and innovation increasingly occur within multinational companies and international networks. At the same time, the concerns increasingly pursue widely differing strategies in the internationalisation of their R&D activities. A recent ISI study shows that governments should not be concerned about domestic multinational companies going abroad to do research. Foreign activities in knowledge-intensive technological areas such as biotechnology or pharmaceuticals are an imperative for successful multinationals, a transnational knowledge integration is evolving, and companies that want to take advantage of this need to play the game, and governments that want their national system to profit, need to secure access to their knowledge systems and support lead market. In Europe, public research, technology and innovation policies are no longer exclusively in the hands of nation-state authorities: national initiatives are supplemented by, or even competing with, regional innovation policies or transnational programmes, in particular the activities of the European Union (EU). In January 2000, the EU Commission challenged the current division of labour with its now famous document "Towards a European Research Area (ERA)". With this first sweeping reform attempt in European R&D policymaking in the last 20 years, the Commission attempts to build up a European research identity which should enable more effective and strategically planned pan-european cooperation. In the context of ERA, the EU Commission supports Networks of Excellence (NoE) and programme-like, longer-term and big scale cooperative Integrated Projects (IP). The aim of the new instruments is to establish self-organised, longer-term cooperation across Europe that would replace the existing approach of short-term, smallscale, Brussels-supervised research projects. In 2003 Jakob Edler and Stefan Kuhlmann (ISI) edited the book "Changing Governance of Research and Technology Policy, The European Research Area" (publisher: E. Elgar), a unique collection of analyses of the development of the ERA. Contributions from leading experts on European integration and technology policy and high-level policy-planners discuss the potential positive and negative impacts and limits to integration. The debate about ERA is thereby placed firmly in the context of the overall changes in governance at the European level. 10

11 The internationalisation of innovation processes and research systems has long been one of ISI s research domains. In parallel, and as a reflection, the institute started to internationalise itself, not last since formerly domestic research markets of the institute are opening up, admitting international competition. ISI s share of research contracts with clients from other European countries and beyond is increasing, and also the institute s involvement in European activities. At the same time, ISI is successfully participating in the new ERA approach and its instruments: the institute plays a leading role in PRIME, an NoE interlinking leading European and international research groups on research and innovation policy analysis. The network has developed a concept to foster the gradual integration of teams (including those from accession countries) in virtual centres of excellence and an innovative organisational structure; it aims at a new generation of internationally linked young researchers. Fraunhofer ISI cultivates contacts with many research institutes worldwide Further, ISI will participate in the integrated project HyWays, whose aim is to design a roadmap for the hydrogen economy in Europe. A total of 39 partners are involved in the project, 25 of them from industry. ISI's main tasks will be to appraise the potential economic impacts and develop an industrial policy for the hydrogen economy. The project is planned to start in February

12 Fraunhofer ISI in the International Research Market A crucial precondition of a European research identity is transparency of existing research excellence across countries. On behalf of the EU Commission ISI together with CWTS, University of Leiden developed an indicator-based approach of measuring and illustrating, i.e. "mapping" excellent research institutes in Europe, using nanotechnology and life sciences as examples. institutes in the partner countries, coordinated by ISI. An extension to interested OECD countries at a later date is also possible. The survey fills the gap in the regular monitoring of organisational and technical process innovations in manufacturing industry, and thus complements existing approaches such as the "Community Innovation Survey" which are focused on product innovations. Fraunhofer ISI s international reputation is reflected in numerous contacts with European partners Germany and Europe are presently experiencing a Renaissance of manufacturing industry as guarantor for competitiveness and prosperity. Besides innnovative products, this entails also the continual technical and organisational modernisation of production structures. The "European Manufacturing Innovation Survey" conducted by Fraunhofer ISI attracted great attention, also in the international arena. With the financial support of the Fraunhofer headquarters, the existing approaches to internationalisation are being systematically extended. The aim is to establish a European survey on innovations in production based on a network of competent In this context, the increased significance of manufacturing, which can be seen not least in the current debate about a European Action Plan for Production and Manufacturing Technologies (MATAV), is underlined by a further European project coordinated by ISI, namely "Manufacturing Visions" (ManVis). The objective of this strategic measure is to conduct and evaluate a Delphi survey in the Member States of the Union and accession countries. It should support the setting of priorities in research and technology policy in the area of processes and methods of the Directorate General Research. In 1975 ISI was a founding member of the Six Countries Programme (6CP; an international network of experts, policy-makers and practitioners engaged in research and policy-making on innovation. Its major aim is to contribute to a better understanding of innovation processes, their impacts on the economy and society and the development of effective (public) innovation policies. 6CP contributes to research and policy-making by organising conferences in the autumn and spring of each year. The objective is to provide a forum for an open-minded exchange of information, reflection, assessment of new developments and identification of "new" issues. 12

13 In November 2002 ISI together with the University of Utrecht, the Netherlands organised a 6CP workshop on "New Governance for Innovation The Need for Horizontal and Systemic Policy Coordination" in Karlsruhe, to mark the occasion of ISI's 30th anniversary. "Changing Governance of Research and Technology Policy" describes and comments the development of the European Research Area For many years ISI has been a core member of the European Network for Energy Economics Research (ENER): the objectives of this network are to bring to debate latest research results concerning the relationship of energy, climate change and economic issues to relevant stakeholders in policy, industry, academia, and NGOs, to strengthen the links between national centres in energy policy and economics research, to use the network as a springboard for collaborative research on a European scale. These objectives are met by exchanging research results and reports, exchanging members of staff, producing a joint bulletin, working seminars and joint research. Recently, ISI signed an agreement with the School of Public Policy at the Georgia Institute of Technology in Atlanta. Both partners anticipate developments which will increase the need for international cooperations in the analysis of science and technology, among others the globalisation of enterprises and knowledge transfer. Finally, the Université Louis Pasteur, Strasbourg, and ISI are intensifying their previous partnership in the form of a "laboratoire européen associé" as a first example of the cooperations between the research organisations CNRS and Fraunhofer. It serves both scientific cooperation and to open up the French market. For Fraunhofer ISI, the motivation for the partnership, which for the time being is planned to last between four and eight years, is the international networking aspect and gaining a foothold in the French third party funding market. ISI researchers now hold four university chairs in four countries (France, Switzerland, the Netherlands, Germany). The institute is continuously hosting visiting researchers from the US, Japan and other countries. The internationalisation of the institute s staff has become part of its future strategy. ISI intends to offer postgraduate training for international fellows in the area of research and innovation policy analysis in the context of the EU Commission s Marie Curie Programme. 13

14 Germany s Technological Performance under the Microscope Back in the mid 1980s, when books like "Japan as No. One filled the shelves of our booksellers, the (then) German Federal Minister for Research and Technology realised that his government issued many economic reports, but had no report on the technological competitiveness of the country. ISI happened to hear about this need and, together with the NIW, over the weekend, we drafted a proposal to prepare a comprehensive annual report on Science and Technology in Germany, along the lines of US reports on competitiveness. The first such report was issued in 1985, the most recent one in Science and technology in Germany remain at a high level. Last year, Germany again spent 2.5 per cent of the gross domestic product on research and development (R&D). Companies had planned to increase their investment in R&D. The situation in 2003, however, will most probably mirror the businesses' uncertainty regarding the medium-term prospects from markets and growth. Throughout the 1990s Germany was able to defend its position as the second most important net technology exporter, even edging slightly ahead since Companies in the advanced technology sector managed to hold their own quite well in spite of the general downward trend. A main driving force in the sector is the automobile industry, one of Germany's traditional strengths; the information technology sector suffered greatly as was the case elsewhere. As R&D activities increase, the demand for all kinds of industrial property rights also grows. Since Germany depends on the world market to quite a considerable extent, it needs patents to use as a strategic instrument in international technological competition. "Triad patents (patents filed at the US plus the Japanese plus the European Patent Offices) represent inventions of particular technological and economic importance. Such patents are regarded as an indication of the intention to expand into innovative markets. Since the second half of the 1990s, Germany has taken a leading position in terms of per-capita Triad patents. These efforts underline the dominant world market orientation of innovative German companies. The other major European economies are not quite able to keep up with this pace. In comparison: as a country with a generally low level of foreign trade intensity, the US, which has the largest domestic market in the world, applies for much fewer Triad patents than one might expect, given the normal R&D pattern. One reason is that the extensive US cutting-edge and defense research activities have per se a lower patent intensity. The persistently slow domestic growth is the Achilles' heel of Germany's technological performance. As a result, Germany is now facing the acid test. It is imperative that industry and government stay on course. Unless Germany wants to risk its future science and technology performance, forward-looking investments in research are the last thing that should be permitted to fall victim to the cuts required for budget consolidation. 14

15 Education and science provide the basis for technological performance. The sluggish performance of the economy can be felt in many areas within the innovation system, but fortunately it has not yet affected the performance of science and basic research. Various indicators describing the output of research in terms of publications and their international citation rates show a high quantity and quality ranking in the upper midfield. But the attention given to German scientific output by citations has flagged in recent years. Many countries have enriched international scientific competition with highly competitive new facilities. In Germany, however, university staffing and university budgets were slashed across the board in a spirit of "solidarity with the present weak economic situation. Some cuts of basic research budgets were able to be mitigated or offset by external funding of projects, but overall not everything has changed for the better since the mid 1990s. At the same time and uncoordinated with national policies, the European Union still does not engage in any form of support for basic research and large firms are abandoning or reducing their involvement in intramural basic research. This is not the fault of the present government which is trying hard to catch up with fewer resources at its disposal, but is rather a secular consequence of the costs of Germany's reunification. A decade ago, 17 million inhabitants from East Germany joined 60 millions in the West. The R&D budget remained constant. This means that, per capita, Germany dropped from the leading positions (together with the US and Japan) to the midfield, and is now trying to creep back. In times of economic crisis, officials should recall that government R&D funding prompts the business enterprise sector to increase its own R&D budget, the so-called leverage effect of public funding. The rule of thumb is that government R&D funding will trigger at least the same amount to be raised by the private sector. This leverage effect could also play a crucial role in reaching the objective of the European Union to increase R&D spending to about 3 per cent of gross domestic product by In this sense, future R&D budget appropriations send an important message to the private sector. Relatively simple calculations show that several hundred thousand additional highly qualified R&D staff are required in Germany to achieve the EU s target. Politicians pressing for innovations would be well advised to do everything they can to urge industry to at least move in the right direction and to abandon zerorounds not adjusted for inflation. What is needed is both R&D funding and an efficient "non-monetary innovation policy (not requiring any additional expenditure). Professor Hariolf Grupp, co-editor of the report on Germany s technological performance At present we witness an intensive political debate of innovation policy. For mobilising resources ("intellectual production factors ) to achieve the 3 % goal in Germany in the year 2010, this debate is just in time. ISI is keen and prepared to contribute to a national dispute on Germany s innovative future in various ways. 15

16 Impact of New Technologies on Employment The German government would like to see research and innovation become the major political topic of the year This is driven by the hope of increasing the competitive strength of the German economy through innovative technologies and making it possible to exploit potentials for new jobs. For quite some time now, Fraunhofer ISI has been investigating how new technologies impact employment figures, as well as the significance of factors such as requirements for employee qualification and employee activity profiles or the regional distribution of the jobs. Here the focus cannot be limited to the new jobs which are created more or less necessarily through the arrival of a new technology; in a more detailed consideration the drop in employment levels for the established technologies replaced by the new technology is also of importance. A proper understanding of the impact of new technologies on employment statistics requires a systematic approach. It is not only necessary to consider the companies and research facilities which function as the actual developers of new technologies, the branches which will utilise the new methods in their production processes must be taken into account as well. Furthermore, there are indirect employment effects in business sectors providing upstream services for the creators and users of technology. National economy factors must also be considered, such as the impact on exports and imports or the investments required for the use of new technologies. Fraunhofer ISI has developed a research method for all these contexts based on the following components: Dr. Thomas Reiß and Reader Dr. Rainer Walz of Fraunhofer ISI on the hopes for new jobs as a result of new technologies Graduates from relevant academic disciplines New employees Need for substitution Employees in biotechnology Academics Nonacademics Retirement Growth restrictions Model simulating future effects of biotechnology on employment Changes in biotechnology areas Exogenous factors "Employment Potentials in Biotechnology" published in 2003 in the new ISI book series "Innovation Potentials" (only available in German) 16

17 Figures on the number of directly affected jobs are taken from existing statistical data and studies. These include for example research facilities and medium-sized technology companies which provide the new technology. On the user side, data on employment impact is derived from production statistics and labour productivity levels. Here, based on expert estimations, those product areas are identified which are currently influenced by the new technology. Micro-census data from the German Federal Statistical Office provide information on the level of employee qualification and employee activity characteristics. Jobs in upstream branches are identified using the ISIS model (Integrated Sustainability Assessment Systems), based on an input/output model to which sub-modules for description of the qualitative employment effects, regional consequences and environmental impact have been added. In order to forecast future employment effects, scenarios are developed representing various basic conditions and their implications for employment. Using this concept, Fraunhofer ISI recently conducted a comprehensive analysis of the employment potentials in the biotechnology sector on behalf of the German Federal Ministry of Economics and Labour. Results showed that in the year 2000 a total of 220,000 jobs were dependent on biotechnology. Almost 70,000 of these jobs were attributed to research facilities directly active in the biotechnology sector (36,000 employees) and to industry (33,500 employees), here in particular to biotechnology equipment vendors (20,500 employees). Only around a third of those employed in industry worked in specialised small or medium-sized biotechnology companies. In addition, approximately 36,000 jobs were identified in upstream branches. Approximately half (114,000) of the total biotechnology employment potential in the year 2000 was attributed to branches which were indirectly influenced by the use of biotechnological methods, technologies or products. The pharmaceuticals industry, the chemicals industry and environmental biotechnology profit the most from biotechnology. The greatest impact on employment emerges in the food industry, although here the significance of biotechnology for competitive strength has remained low. By the year 2005, a considerable rise in employment figures is to be expected in comparison with 220,000 jobs in the year 2000: although the actual core sector will remain small in terms of absolute numbers in spite of high growth until 2005, between 274,000 and 412,000 new jobs are to be expected in branches where biotechnology is of high importance for competitive strength, depending on the scenario. According to the study, the upcoming years will see no general shortage of university graduates in the biotechnology sector. Some bottlenecks are already appearing today in niche sectors, however, for example in bioinformatics and in terms of specialised scientific and engineering personnel. The number of people employed in the biotechnology sector will increase markedly in the years to come 17

18 Innovations in Biotechnology Dr. Bärbel Hüsing stated her views on stem cell research on Swiss television Egg Sperm Fertilised egg Blastocyst Inner cellmass Arguments for the Stem Cell Debate In mid-2001 the Fraunhofer ISI received the assignment to conduct a study on "embryonic stem cells" from the Centre for Technology Assessment at the Swiss Science and Technology Council. At the time the topic hardly enjoyed any attention in the Swiss public eye, much in contrast to the situation in Germany. This changed suddenly as the Swiss National Science Foundation approved a project request that entailed the import of human embryonic stem cells. Due to the unclear legal situation in this delicate area, a number of parliamentary initiatives led to an emergency bill which should resolve the grey areas and legal loopholes. The sudden relevance also made it necessary for the Fraunhofer ISI to act: at the request of the Centre for Technology Assessment, Fraunhofer ISI succeeded in presenting results much more quickly than originally planned. The Swiss Federal Office of Public Health, author of the draft bill, had access to the information as early as the preparation of the project report, some of which was included in the bill formulation. In contrast to public debate in Switzerland, the ISI report is not limited to the sub-area of human embryonic stem cells, but rather deals with adult human stem cells and all their potentials, impacts and risks. Therefore, the report will be of great use above and beyond its current relevance in matters concerning long-term legislation on research on human beings. The report points out, for example, that the option favoured in Switzerland of allowing the derivation of stem cells only from so-called "surplus" human embryos, would nevertheless mean an entry into consumptive embryonic research. Decisionmakers were informed that research on the human embryo cannot be restricted to the derivation of stem cells, but rather that this would open the way towards deliberate creation of human embryos for research purposes, for reproductive cloning as in the case of "Dolly", as well as for other applications such as preimplantation diagnostics. The high degree of importance attributed to the work of Fraunhofer ISI is evident from the numerous inquiries received by the Institute. Project director Dr. Bärbel Hüsing was asked to speak and has addressed legislators regarding the results of the studies on several occasions. During parliamentary debate on the bill she participated as an expert in a hearing held by the Swiss National Council's Committee for Science, Education and Culture. The Swiss television network SF1 has also produced a science programme with Bärbel Hüsing on the topic of stem cells. Contact: Dr. Bärbel Hüsing (-210, b.huesing@isi.fraunhofer.de Staff members Thomas Reiß 2 Bärbel Hüsing 3 Sibylle Gaisser 4 Sybille Hinze 5 René Zimmer 6 Renate Heger 7 Silke Just 8 Iciar Dominguez-Lacasa 9 Bernhard Bührlen Michael Nusser (not in photograph)

19 Fewer Field Trials with Genetically Modified Plants The number of field trials involving genetically modified plants in the EU has plummeted by 76 per cent over the last five years: the findings of a Fraunhofer ISI study conducted together with the University of Hohenheim, Germany and the Institute for Prospective Technological Studies in Seville, Spain caused quite a sensation. Politicians, including EU Agriculture Minister Franz Fischler and Research Minister Philippe Busquin, reacted to the news by warning against an EU falling back in "green genetic engineering", while around the world, and in particular in the US, the amount of acreage growing genetically modified plants is rapidly on the rise. According to project director Professor Klaus Menrad, the reason for the drop in the EU is the moratorium on field trials put in place four years ago by the EU Council of Environment Ministers, together with lacking acceptance levels among the public. The great majority of participants in this volatile market are financially high-powered multinational concerns, responsible for 65 per cent of all field trials. Small and medium-sized companies, with six per cent of trials, are only present in small numbers and concentrate primarily on specialised market niches. However, the study also provides reasons for optimism: according to the report, the pipe-line is well filled with genetically modified organisms. In particular, analyses of the increase in resistance to insects and herbicides have shown great progress. After an October 2002 EU directive reinstating regulations on the release of genetically modified organisms, the European Union expects renewed growth in the number of field tests. In the meantime, the debate has shifted to the socalled "coexistence" of genetically modified and nongenetically-modified plants, thus focussing on the question of what measures, if any, will be necessary to minimise possible pollen transmission or the intermixture of various plants. The department plans additional investigations on this topic. Information: Contact: Dr. Thomas Reiß (-160, t.reiss@isi.fraunhofer.de) Biotechnology Systematically Endless Medications? Biotechnology has achieved enormous success in decoding the elements of life. How they work together in an organism is, however, still a mystery. Therefore, the Federal Ministry for Education and Research has recently committed 50 million euro to support the new issue "Systems Biology", a research programme that is currently unique in Europe. In preliminary stages the Federal Ministry for Education and Research gave Fraunhofer ISI the task of planning and conducting a future process for developing the new research programme. For this purpose, national and international research facilities and companies were consulted, discussion papers were written, and thoroughly scrutinized in workshops with experts from industry and science. At the end of the one-and-a-half year process, a recommendation for the funding programme as well as a brochure for Systems Biology were written. In an EU follow-up project Fraunhofer ISI is now to carry out a benchmarking study in order to clarify to what extent the EU is making progress in Systems Biology compared to the US. The goal is to combine the most innovative institutes in this field into a "Network of Excellence". Contact: Dr. Thomas Reiß (-160, t.reiss@isi.fraunhofer.de) How many drugs may our society afford in the future? The study Sustainable Drug Provision investigated this question on behalf of the Hans-Böckler Foundation. Whether only basic care with medications will be guaranteed or whether lifestyle medications like Viagra will also belong to the catalogue of services should not depend solely on the insurer s financial situation. The project manager, Sibylle Gaisser, has come to the conclusion that society has to discuss and decide which kinds of medical care are important or dispensable. The survey examined strengths and weaknesses of the entire value chain from basic research to clinical studies to the sale of medications and the patient s role and makes suggestions as to how a sustainable provision of medications could be organised in the future. A follow-up study sponsored by the same client is now to determine how innovative in international comparison Germany is as a pharmaceutical location and how its competitiveness can be strengthened. Contact: Dr. Sibylle Gaisser (-205, s.gaisser@isi.fraunhofer.de) For further projects, see p. 34 Fraunhofer ISI investigates how the basic supply of medicine can be guaranteed 19

20 Technology Analysis and Innovation Strategies The first patent issued in the German Reich dated 1877 Index Patents Blessing or Curse? In the last ten years, the number of international patent applications of German origin has doubled. Simultaneously, the expenditures for research and development in the companies has increased only slightly. On behalf of the Federal Ministry for Education and Research, the Fraunhofer ISI investigated whether this can be attributed to increased efficiency in research, or whether other reasons play a role. The Fraunhofer ISI study, based on the estimates of 556 firms which had applied for at least three patents in the year 1999, showed that patents today no longer serve only as protection from imitations and to secure the market. Rather, they have Patents Expenses applied R&D developed into a strategic instrument. For example, they are utilised today to block competitors, to strengthen the reputation of the enterprise and they are used as performance incentives for own employees. Vis-à-vis cooperation partners and licensees they serve as a form of currency, in which knowledge and innovations can be "exchanged". In this respect patents are only of limited use as a benchmark for the efficiency of research and development in a company. Even if small and medium-sized enterprises have also increased their patent activities, it is decisive for the assessment of patenting activities that a small number of very large companies apply for the great majority of patents and that this concentration has in fact even increased in the past years. In the opinion of the researchers in the department Technology Assessment and Innovation Strategies, one possible negative consequence of strategic patenting is that the granting of strategic patents can hinder innovations and serve to undermine the market participants' sense of security. The patent offices should therefore aim to calm down the "arms race" in patents, by strictly ensuring that patents granted fulfill high quality standards and in particular display an adequate level of invention. The study assumes, however, that the number of patents will grow more slowly in the next years, as the advantages of an even greater number of patents reach its limits for large enterprises also. Contact: Dr. Jakob Edler (-129, j.edler@isi.fraunhofer.de) Staff members 1 Kerstin Cuhls 2 Renate Klein 3 Jakob Edler 4 Stefan Kuhlmann 5 Meike Urresta-Carillo 6 Rainer Frietsch 7 Ulrich Schmoch 8 Knut Blind 9 Claudia Rainfurth 10 Thomas Heinze 11 Sabine Haffner 12 Edeltraud Geibel 13 Rainer Bierhals Chris Mahler-Johnstone (not in photograph)