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INNOVATION, SCIENCE & COMMERCIALISATION

Gross value added — knowledge-intensive industries

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Figure 2.1 Gross value added of the knowledge-intensive industriesYear-ended quarterly estimates, chain volume measures, indexed to December 2004

Notes:

Knowledge intensity has been defined as the value of an industry’s stock of knowledge based capital (intangibles) as a proportion of its gross value added.

Source:

Australian Bureau of Statistics (2015) Australian National Accounts: National Income, Expenditure and Product, Sep 2015, cat. no. 5206.0, table 6

Four of the five most knowledge-intensive industries have grown faster than the Australian economy over the past 10 years.

Knowledge intensity measures the value of an industry’s stock of knowledge based capital (intangibles) as a proportion of its gross value added. Using this metric, the most knowledge intensive industries are Mining, Professional, Scientific & Technical, Information, Media & Telecomms, Manufacturing and Financial & Insurance.

The majority of the top five knowledge-intensive industries have grown faster than the Australian economy over the past 10 years. The rate of growth varies across the five industries. Mining grew the fastest as a result of the mining boom. Manufacturing is the only knowledge-intensive industry to have experienced a decline in gross value added. It has contracted 10.7 per cent since its peak in September 2008.

INNOVATION, SCIENCE & COMMERCIALISATION

Employment — knowledge intensive industries

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Figure 2.2Employment in the knowledge-intensive industriesTrend indexed to February 2005

Notes:

Knowledge intensity has been defined as the value of an industry’s stock of knowledge based capital (intangibles) as a proportion of its gross value added.

Source:

Australian Bureau of Statistics (2015) Labour Force, Australia, Detailed, Quarterly, Nov 2015, cat. no. 6291.0.55.003, table 4

Employment in two of the five most knowledge-intensive industries has grown faster than the all industries benchmark over the past 10 years.

In 2015, the top five knowledge-intensive industries accounted for 23 per cent of total employment. Professional, Scientific & Technical overtook Manufacturing in 2014 as the largest employer out of the top five knowledge-intensive industries.

Since 2005, Mining has had the highest growth in employment of all industries. Mining employment was highest in 2012, soon after the peak in commodity prices. However, the growth in Mining employment increased off a low base and it remains a relatively low-employing sector. Over the same period, employment in Manufacturing declined 16.9 per cent.

INNOVATION, SCIENCE & COMMERCIALISATION

Investments in intangible assets

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Figure 2.3 Private gross fixed capital formation — intellectual property productsYear-ended quarterly estimates as a percentage of GDP, chain volume measures

Source:

Australian Bureau of Statistics (2015) Australian National Accounts: National Income, Expenditure and Product, Sep 2015, cat. no. 5206.0, table 2

Intellectual property investment has decreased as a share of GDP since 2013.

Growth in developed economies is increasingly driven by investment in intangible assets. Intangible assets are assets that do not have a physical or financial embodiment. They comprise of R&D, Mineral & Petroleum Exploration, Computer Software and Artistic Originals. In some countries, firms now invest as much or more in intangible assets as they do in physical capital such as machinery, equipment and buildings.

Since 2013, investment in intellectual property products has increased in absolute terms but declined as a proportion of GDP. Since the end of the mining investment boom, this decline was partly driven by decreased expenditure on Mineral & Petroleum Exploration.

In contrast, over the past decade, investment in Computer Software and Artistic Originals has grown steadily and at a faster rate than GDP.

Find out more about intangible capital here.

INNOVATION, SCIENCE & COMMERCIALISATION

R&D proportion of GDP — international comparison

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Figure 2.4 R&D expenditure as a percentage of GDPLatest year of data (2013 for most countries)

Source:

OECD (2015) Main Science and Technology Indicators Database (MSTI 2014/2), Viewed 13 February 2015, http://www.oecd.org/sti/msti.htm

Australia’s expenditure on R&D as a percentage of GDP is below the OECD average.

R&D is the systematic investigation or experimentation which leads to new knowledge and improved products, processes and services in the economy.

Higher education, government and business are the key sectors that invest in R&D. Australian spends proportionally more on higher education R&D than the OECD average. Government R&D was marginally below the OECD average, with business R&D substantially below the average.

Australia overall performs well against other resource rich countries such as Canada.

INNOVATION, SCIENCE & COMMERCIALISATION

R&D proportion of GDP — Australian industries

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Figure 2.5Business expenditure on R&D by industryChain volume measures, 2013 –14

Source:

Australian Bureau of Statistics (2014) Research and Experimental Development, Businesses, Australia, 2013-14, cat. no. 8104.0, table 2 and Australian Bureau of Statistics (2015) Australian System of National Accounts, 2014-15, cat. no. 5204.0, table 5

Industries that are more knowledge intensive invest more in R&D.

Business expenditure on R&D as a percentage of GDP varies substantially across industries. The sectors with the highest expenditure on R&D are the top knowledge-intensive industries.

Mining R&D expenditure as a proportion of GDP has decreased over the past year, going from second highest in 2012-13 to fourth in 2013-14. Wholesale Trade has increased its business expenditure on R&D to replace Information Media & Telecomms in the top five.

INNOVATION, SCIENCE & COMMERCIALISATION

Businesses engaging in innovation — international comparison

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Figure 2.6 Innovation global comparisonsPercentage of firms that are innovation-active, 2011

Notes:

OECD+ includes all countries in the OECD, as well as China, Taiwan and Singapore

Source:

Department of Industry, Innovation and Science (2015) Australian Innovation System Report 2015, Office of the Chief Economist, page 110

Australian enterprises are innovative by OECD standards. Australia is good at incorporating new-to-business innovations but is poor at introducing new-to-market innovations.

A larger proportion of Australian small and medium-sized enterprises engage in innovative activity than the OECD+ average, with Australia ranking in the top five OECD+ countries in terms of small and mediumsized enterprise innovative activity.

Australian large enterprises tend to engage more in innovative activity than smaller enterprises but do not perform as well when compared with OECD+ top five countries.

Most of the innovations in Australian businesses are new-to-business; they are adoptions and modifications of innovations developed by others. For innovations of a high novelty, Australia performs poorly compared to other developed economies. For new-to-market innovations, Australia ranked 24th from 30 OECD+ countries.

INNOVATION, SCIENCE & COMMERCIALISATION

Collaboration — international comparisons

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Figure 2.7 Collaboration international comparisonsPercentage of innovation-active firms collaborating on innovation, 2009




Figure 2.8 Collaboration international comparisonsPercentage of innovation-active firms collaborating with universities and other non-commmercial research institutions, 2011

Notes:

OECD+ includes all countries in the OECD, as well as China, Taiwan and Singapore

Source:

Department of Industry, Innovation and Science (2015) Australian Innovation System Report 2015, Office of the Chief Economist, page 115

Australia’s collaboration performance is below the OECD average, particularly between businesses and research institutions.

The proportion of Australian businesses collaborating on innovation is relatively low at 24 per cent, compared with the OECD average of 35 per cent. Large firms have performed better than their smaller peers on collaborating on innovation.

Firms that collaborate on innovation are significantly more likely to report productivity and profitability growth, especially if it is with research organisation partners. They are also significantly more likely to introduce more novel innovations.

Collaboration between businesses and universities and other non-commercial research institutions is among the lowest in the OECD.

INNOVATION, SCIENCE & COMMERCIALISATION

Australia’s global innovation rankings

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Table 2.1 Global rankings for Australia innovation

  2011 2012 2013 2014 2015
Global Innovation Index 21 23 19 17 17
Innovation Input Sub-Index 12 13 11 10 10
Innovation Output Sub-Index 31 31 32 22 24

Notes:

The Global Innovation Index ranked 141 economies in 2015. The number of economies examined can vary from year to year.

Source:

Cornell University (2015) INSEAD, the World Intellectual Property Organization, Global Innovation Index 2015, Viewed 26 January 2016,https://www.globalinnovationindex.org/content/page/GII-Home

Australia’s ranking in the Global Innovation Index edged up, in the top 20 globally for the third consecutive year.

The Global Innovation Index aims to capture the multi-dimensional facets of innovation. The index ranks economies’ innovation capabilities.

Australia ranked 17th out of 141 economies in the Global Innovation Index in 2015.

The Innovation Input Sub-Index monitors conditions in the business environment, access to finance, competition and trade openness. The Innovation Output Sub-Index monitors knowledge and technology outputs and outputs of creative activities. Australia’s rankings on both Sub-Indexes have improved since 2011.

Find out more about Global Innovation Index here.

INNOVATION, SCIENCE & COMMERCIALISATION

Research collaborations

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Table 2.2 Number and value of research contracts, consultancies and collaborations entered into by research institutionsCollaboration indicators

  2012 2013 2014
Total number 11,146 12,228 15,463
Total value ($m) 1,408 1,598 1,808

Notes:

Research institutions include medical research institutes, universities and publicly funded research agencies. In 2014, two additional publicly funded research organisations participated in the survey. Income values have been adjusted for inflation.

Source:

Pre-release figures from Department of Industry, Innovation and Science National Survey of Research Commercialisation http://www.industry.gov.au/nsrc
Figures may be subject to change.

Collaborations between research institutions and industry improved strongly in 2014.

The number and value of research contracts, consultancies and collaborations provide an indication of the level of engagement between research institutions and industry partners.

Surveyed institutions entered into 15,463 research contracts, consultancies and collaborations in 2014, representing a 26.5 per cent increase from the previous year.

At the same time, the total value of the research contracts, consultancies and collaborations also increased, going from $1,598 million in 2013 to $1,808 million in 2014.

These most recent results are encouraging, given Australia’s relatively poor collaboration on innovation performance (see also Figure 2.7).

This data is drawn from the National Survey of Research Commercialisation, which collects information on the engagement and commercialisation activities of publicly funded research organisations in Australia. It is Australia’s primary source of information on the publicly funded research sector’s efforts to collaborate with industry.

INNOVATION, SCIENCE & COMMERCIALISATION

Citations — natural science and engineering publications

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Figure 2.9 Natural science and engineering publicationsShare of the world’s top one per cent of highly cited publications

Notes:

OECD+ includes all countries in the OECD, as well as China, Taiwan and Singapore

Source:

InCites TM, Thomson Reuters (2016)

Australia outperforms most countries in research publications.

Australia’s scientific publications continue to have a higher academic impact than most other OECD+ countries.

In 2015, the share of the world’s top one per cent of natural science and engineering publications attributed to Australia increased to 6.9 per cent (up from 6.5 in 2014). This was higher than the OECD+ average of 4.3 per cent, placing Australia eighth among OECD+ economies.

Australia also ranks eighth in terms of its share of the world’s top 10 per cent of natural science and engineering publications.

INNOVATION, SCIENCE & COMMERCIALISATION

Scientific and technological qualifications

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Table 2.3 Science and technology qualification completionsCompletions in University and Vocational Education and Training 2014

  University completions University completions, 5 yr growth (per cent) VET completions VET completions, 5 yr growth (per cent)
Science 19,000 5.6 14,000 11.3
Technology 5,000 2.7 6,000 1.9
Engineering 14,000 5.2 20,000 14.6
Mathematics 3,000 6.3 500 –20.5
Medicine 47, 000 6.3 11,000 10.4
All other disciplines 215,000 4.2 349,000 9.0

Notes:

Data is for domestic students only. Medicine in this definition includes Health-related qualifications. Five year growth is the annual average growth over five years.

Source:

uCube (2016) Department of Education and Training; ABS Census of Population and Housing; Department of Industry, Innovation and Science calculations

Overall growth in the number of science and technology completions was higher than for other fields of education.

Science and technology knowledge and skills lead to new products, more efficient services, and a more diverse and resilient economy.

Graduates in Science, Technology, Engineering, Mathematics and Medicine provide workers to diverse parts of the Australian economy. Demand for different sectors will be affected by economic or policy events, such as commodity prices affecting the engineering workforce and government policy affecting the health sector.

The five-year growth rate in the number of science and technology graduates was mostly higher than for other fields of education. For VET, Engineering and Science had the strongest growth.

The scientific and technological workforce has grown at 2.7 per cent per year over the past five years, above the 1.5 per cent growth for all industries. The technology and medicine disciplines show the highest growth in employment.