INNOVATIONALIZING GOVERNMENT INVESTMENT: JAPAN S NEW STI POLICIES

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1 INNOVATIONALIZING GOVERNMENT INVESTMENT: JAPAN S NEW STI POLICIES Abe Global Forum Takahiro Ueyama, Ph.D. Full-time Member of the Council for Science, Technology and Innovation, Cabinet Office, the Government of Japan

2 Administrative Structures for STI Policy in Japan Members of CSTI Chairperson Shinzo ABE Prime Minister Yoshihide SUGA Chief Cabinet Secretary Taro ASO Minister of Finance Cabinet Members Takuya HIRAI Minister of State for Science and Technology Policy Masahiko SHIBAYAMA Minister of Education, Culture, Sports, Science and Technology Masatoshi ISHIDA Minister for Internal Affairs and Communications Hiroshige SEKO Minister of Economy, Trade and Industry Relevant ministers are appointed as ad-hoc members when needed to attend plenary session meetings of CSTI Dr. Takahiro UEYAMA Former Vice President & Professor, National Graduate Institute for Policy Studies (Full-time Position) Ms. Yumiko Kajiwara Corporate Executive Officer, Fujitsu Ltd. Dr. Motoko KOTANI Professor, Tohoku University Dr. Yoshimitsu Kobayashi Director of the Board & Chairperson, Mitsubishi Chemical Holdings Corp. Head of an Affiliated Organization Mr. Masakazu TOKURA Representative Director & President, Sumitomo Chemical Co., Ltd. Dr. Kazuhito HASHIMOTO President, National Institute for Materials Science Dr. Seiichi MATSUO President, Nagoya University Dr. Juichi YAMAGIWA President, Science Council of Japan 2

3 Societal Challenges We Should Overcome l Serious societal challenges declining birth rate and rapidly aging population Gap and Separation b/w large enterprises and SMEs, urban and rural area Uncertainty for social and economical sustainable growth l How can Japan overcome these challenges? 5th Science and Technology Basic Plan (Apr.2016) A new concept Society 5.0 is a hypothetical solution to our serious societal challenges Making Society 5.0 and 5 th Basic Plan a reality 3

4 What is Society 5.0? Realize the advanced fusion of cyberspace and physical space, To balance economic advancement with the resolution of social problems, Bring about a human-centered society New society Society 5.0 Society 1.0 Hunting & gathering Society 2.0 Agricultural Society 4.0 Information Society 3.0 Industrial 4

5 Platforms for Realizing Society 5.0 as a New Social Mode of Productivity The development of Intelligent Transport Systems (ITS), Optimized Energy Value Chains, and New Manufacturing (monozukuri) Systems as core systems of 11 systems, cooperating with other systems, building platforms to facilitate the creation of new value Construction and Utilization of Databases as a Foundation for the Creation of New Values and Services Reinforcing Basic Technologies (e.g., AI, IoT, big data analysis) that Underlie these Platforms Smart Production Systems Medical Representation of Platforms for Realizing Society 5.0 Smart Food Chain Systems Global Environment Information Platforms Integrated Material Development Systems Manufacturing Systems Cybersecurity New Services Energy Value Chains Systems Geographical Hospitality Systems Comprehensive Regional Care Systems Intelligent Transportation Systems Basic Technology AI, IoT, big data processing technologies, cybersecurity, etc. Environmental Infrastructure Maintenance System Disaster Prevention and Reduction Systems Materials These Databases are reference examples Databases Promotion of intellectual property strategies and international standardization Promotion of regulatory and institutional reforms and fostering social acceptance Promotion of skills development and personnel development 5

6 Advanced Fusion of Cyberspace and Physical Space All types of data will be gathered from sensors installed throughout physical space via IoT. This Big Data will be analyzed by AI, and the results will then be fed back in physical space. ② This massive amount will be accumulated in cyber space ① All types of data will be gathered from sensors installed throughout physical space ③ Big data will be analyzed by AI that exceeds the capabilities of humans Cyberspace Big Data Analysis environmental information, equipment operating status, or people-related information, etc. Physical space I Artificial Intelligenc e ④The results will be fed back in physical space in robots, automaticdriving cars, etc. high-value-added information, proposals, or equipment operating instructions, etc. Automatic Automatic Robots Driving Delivery Sensors 6

7 Policy challenges we should address 1. Need to make the concept of Society 5.0 into a reality 2. Need to recover from the downward trend of Japan s research capability during the recent decade 2. Need to expand the STI related investment in the Government Budget 3. Need to make our own policy initiatives which in order to hook up S&I into innovation process 7

8 Financial Challenges We Should Overcome l Need to expand the Government R&D Investment under the Serious Financial Constraints Serious national debt and financial deficit Social security expenditure continues to rise by 1 trillion yen every year Promise: Combined public and private sector R&D investment of at least 4% of GDP; government R&D investment of at least 1% of GDP 8

9 Current Status related to STI: R&D Intensity R&D intensity (R&D expenditure as a percentage of GDP) Korea Japan Germany United States OECD Total France European Union(15) China European Union(28) United Kingdom Russian Federation R&D Intensity by Government(%) R&D Intensity Total(%) Source: OECD, Main Science and Council Technology for Science, Technology Indicators and Database, Innovation, Cabinet February Office

10 Budget Level: Government R&D Investment=1% of GDP (estimated by the Cabinet Office) Need to increase S&T-related budget by 900 billion yen over 3 years (300 billion yen per year) in order to meet the government R&D investment targets (1% of GDP, 6 trillion yen) by FY2020 (the final year of the 5 th Basic Plan) ( trillion yen Government R&D investment 4.4 Trillion yen Need a significant increase in S&Trelated Budget! Targeted government R&D investment in FY2020 = 6 Trillion yen Supplementary Budget (Largest in the past 10 years) Budget for local governments (the same level as FY2017) Required level of budget (initially) 900 billion yen (300 billion yen/fiscal year) ) FY 2016 FY 2017 FY 2018 FY 2019 FY2020 (fiscal year) 10

11 Evidence-Based Policy Making v Definition and identification of STI budget within all governmental programs and projects v Cross-ministerial (cross-departmental) approach of government s budget - Considering STI within the whole GB - Securing the necessary budget to create the innovation ecosystem via government s investment v Exploring research structure of national institutions - Collecting all financial and personnel data of national universities and national institutes - Institutional Research Environment 11

12 Investment in Japanese R&D and Government Investment in R&D Contents and portfolios need to be constructed in order that government investment in R&D will prime the pump for R&D investment throughout the entire country. Through the use measures such as administrative project review sheets, we should confirm a concrete overall picture of STI policy with the aim of both maximizing the effects of investment and enhancing policy objectives and sectors deserving of expansion. For science and technology-related budgets for universities etc. (which account for two-thirds of the total), we should consider collecting necessary information specific to individual policy objectives and sectors. Overseas Industry Japan s R&D Investment JPY18,133,600 million=18 trillion (FY 2011) MIC Survey of Research and Development Overseas Private Universities Japanese Government FY2017 Budget: Total 3.84 Trillion yen (US$ 34.9 Billion) Universities Trillion Yen (101.9 Billion US$) 30% Implemented directly by Ministries 34% 1.18 Trillion Yen (95.0 Billion Euro) Research Institutes and Funding agencies 1.05 Trillion Yen (84.3 Billion EURO) 1 Since it represents a compilation of the preliminary reported values from each ministry and agency excludes the portion of public works expenses that is currently undetermined (recorded in the Special Account for Social Capital Development Projects to FY2013), this summary will be subject to change with future examination. 2 Values in parentheses ( ) represent initial budget figures for FY For universities, etc. subsidies for administrative expenses for private universities and the like are considered to be included in operating expense grants from FY

13 Current Status related to STI in Japan S&T Budgets distributed to Ministries Cabinet Office Ministry of Agriculture, Forestry and Fisheries (MAFF) Ministry of Health, Labour and Welfare (MHLE) Ministry of Defense Ministry of Economy, Trade and Industry(METI) It is necessary to know details of budgets distributed to ministries In order to analyze effectiveness of each STI policy Ministry of Education, Culture, Sports, Science and Technology(MEXT) FY2017 Budget: Total 3.49 Trillion yen (EURO 28.1 Billion) Source: Bureau of Science, Technology and Innovation, Cabinet Office (2017) 13

14 Image of government activities in view of R&D and innovation <New and uncertain activities> Research, Development, Investigation Implementation, ndustrialization, Intellectual property, Standard et al Diffusing Training Spreading ProcurementProcurement, Estimation Introducing of of Introducing Capital Goods human resourcesback office Public expendables relations and Common capital goods Knowledge Equipment of organization duties Management and operation Operatonal Basic Budget For Universiy Activities related with implementation of knowledge or method new to the subjects Activities which utilizes the outcome of science and technology <Fixed and certain activities> Provision of fixed administration services 8

15 Redefinition of Government Budget for Science and Technology v Classification of S&T Budget based on FRASCATI and OSLO Manual of the OECD v Scrutinized over 5000 Programs and Project of all Ministries using administrative project review sheets Category of S&T Budget A Content Research & Development, Projects for Implementation, Intellectual Property, Standardization S&T Budget Applicable B Budget related to University, R&D, Implementation, Commercialization, etc. Applicable C Preparatory Programs for Research, Investigation, R&D, Standardization, Implementation, etc. Standardization for Measurement, Regulation, and Fact-finding: Collection of Data, Creating Database Applicable D1 Programs which promote new scientific technologies (hitherto not well utilized) Applicable D2 Programs which promote new methods (hitherto not well utilized) excluding S&T N/A E Programs which promote already known but not yet well implemented N/A F Others N/A v Identifying the total national investment on S&T by using comprehensive data of government s budget v Identifying innovation related programs which will enhance the diffusion and implementation of scientific technologies in the society. v Identifying policy targets to accelerate Integrated National Innovation Strategy 15

16 Policy Target to Implement the Basic Plan for STI 16

17 Policy Target to Implement the STI for SDGs 17

18 Conceptual Challenges of CSTI policies vredefinition of Innovation as STI concept - Innovation: not directly connected to economic value vwhat the government can do - keeping potential seeds of innovation, disseminating and diffusing its outcome and leading to economic value - Policies for intellectual property - Policy for Government procurement - Standardization both of concept and research seeds - Innovationalization of government budget 18

19 2018 Integrated Innovation Strategy - Basic Concepts l Creation of Optimal Socioeconomic Structure for Society 5.0 Ø Current rigid structure flexible and agile structure l Total renovation on STI Policies Ø Back ground : Global game change of innovation mechanism Ø Way forward: Break away from past trajectory of STI policies cf. The 5th Science and Technology Basic Plan, Comprehensive Strategy on STI 2017 Key concept= Integration of STI policies ex. - comprehensive strategies Source of Innovation Creation of Innovation Implementation Global deployment - Coordination among related control towers cf. CSTI, IT, Space, Ocean, Health, etc. 19

20 2018 Integrated Innovation Strategy Action 1: Renovating Innovation Ecosystem l Renovating Knowledge-Intensive Cluster Renovation of R&D management Ø University reform as the core for K/I cluster Re-definition of National Universities Universities as central hubs for innovation, business creation, socialcontribution Modification of university concept cf. investment target Introduction of ERP (Enterprise Resource Planning) cf. National Universities=86, National Research Institutions=27 The governance and management of university Enhancing talented human resources Institutional funding to the basic finance of university Challenges beyond borders ex. large-scale academia-private collaboration, international R&D collaborations 20

21 New Framework for Funding National Universities ( ) A new system was developed for distributing part of the management expenses grants to National Universities to support the universitiesʼ efforts to further strengthen their strong points in the following three areas. Category 1 : Contribute to regional areas (55 univ.) Category 2 : Specialize in specific fields (15 univ.) Category 3 : Perform outstanding educational and research activities at world-class standards (16 univ.) Each national university selected one area for which they wished to receive extra funding, and set out their visions, strategies, and KPIs accordingly. Overall, 298 strategies were made and over 2,000 KPIs were set in order to evaluate the processes leading to the reform of 86 national universities. The outcomes of the KPIs will be evaluated annually to determine the amount of the funding for each year. This funding framework will support the reforms universities and accelerate the speed of the reforms. +10% or more +0-10% -0-10% % -20% or more Category 1 3 univ. 25 univ. 22 univ. 5 univ. 0 univ. Category 2 1 univ. 5 univ. 7 univ. 1 univ. 1 univ. Category 3 0 univ. 7 univ. 6 univ. 3 univ. 0 univ. Allocation for FY2017 Based on the evaluation results of the KPIs, the amount of funds allocated to each university were increased or decreased by the percentages as shown in the table. of the For example, among the 55 universities that selected Category 1, 3 received the highest evaluation and their funding was increased by 10%. 21

22 2018 Integrated Innovation Strategy Action 2 : Identifying the Path of Knowledge Creation l 3 pillar model cf. Data fusion = Source of Innovation Ø Social Data = Platform for Society 5.0 Comprehensive architecture design on cross-field and fieldspecific data linkage platforms cf. data-interface, semantic data, applications, data market, cyber security, privacy, related inter/intra discipline, etc.) Global linkage cf. NIEM(US), FIWARE (EU) Ø Academic Data = Promotion of open (closed) science Ex. Data administration guideline for machine/ai-readable research data reverse MI, data driven bio research Ø Official Data = quasi-utility Function model Ex. Evidence, based on comprehensive analyses on R&D funds and outputs from governmental STI projects, etc. 22

23 Data Infrastructure as a Source of Innovation Social Data Academic Data Public Data Private Company Researchers Gov. Univ. Insti. Society 5.0 実装イメージ 分野間データ連携基盤 インフラ 防災 減災 Physical Space Data Infra. 安全 安心 サービスポータル機能 ( 検索, フ ライハ シー保護等 ) 物流 農業 建設 生産性革命 共通管理機能 ( 語彙, カタログ等 ) Creating and Sharing Grand Design of Data Policy : Standardization and Confirmation 人生 100 年時代 健康 医療 介護 分野横断連携機能 ( 認証認可, テ ータ接続等 ) Research Data Infra. 新たな研究の創発 異分野連携 研究不正防 データ検索基盤検索 利用 EBPM Infra. エビデンスに基づく政策 案 法 運営の促進 EBPM EBMgt アプリケーション 分野毎データ連携基盤 センサーデータ 自動運転データ 当面 11 分野で整備を進め 相互運用性を確保 農業データ ものづくりデータ 健康 医療 介護データ エネルギー物流 商流インフラ防災地球環境海洋 宇宙 データ連携 管理 保存 データ管理基盤 論 公開 蓄積 データ公開基盤 長期保存対応ストレージ領域 大学 研究データ ( 実験 観測データ等 ) 研究機関 研究助成機関 データ連携 学会等 エビデンスデータベース テ ータクリーニンク 機微情報加 公的統計レビュー国 研発論 特許等データシート データ等書誌データ 財務会計 事給与業績管理 助成 管理 基幹業務システム 23

24 Conversion Policy of Science, Technology and Innovation: A way of Innovationalizing Government Budget l Scrutinize all of the Government Program l Converting the non-sti programs to STI-related ones Convention policies for STI programs - Introduction of advanced technology to the conventional government programs - government procurement of goods, services, and constructions by government agencies - Introduction of the viewpoint of science and technology innovation for human resource development project l CSTI certifies the converted programs for STI that each ministry registered to the Cabinet Office l The CSTI supports the certified projects in budget assessment process in cooperation with the Ministry of Finance 24

25 Examples of Conversion Policy for STI ① Introducing state of art technology ② Introducing advanced technology in Government programs into the public works 業の内容を 直し 先進技術を導 実証 Ministry of Land, Infrastructure, and Transport: i-construction これにより事業の効果 効率性が向上するとともに 先進技術の普及を後押し 例えば 総務省ではビッグデータ等を活 し 災延焼シミュレーションを 度化 科学的検証に基づく 災延焼予測を実施可能に Public works シミュレーションを 活 した 災防ぎょ 計画の策定 i-construction 実験や過去の 災データ Big Data ３次元設計データ等により ICT建設機械 を 動制御し 建設現場をIoT化 ③ Diffusion of new technologies in private sectors Ministry of Agriculture, Forestry and Fisheries: Encouraging the Robotics, ICT technologies, etc. Big Data Sensor Agricultural Robots 気象データ リアルタイムでの 災リスク予報 ④ Creation of Medical Information Infrastructure Medical Information Database of electrical medical records etc. as the basis of Big Data Medical Infrastructure Governme nt Mecical Big Data Pharma Researche s 25

26 2018 Integrated Innovation Strategy Action 3 2 pillars : Private sector cf. Startups, Public Sector reform l Private sector Ø Original/Unique R&D startup ecosystems Global level private enterprises cf. affordable funds, knowhow, networks. Strength in basic science public-private collaboration tradition, diligent culture, etc. Ø Comprehensive Ecosystem : Seeds/PoC/launchi/Expand/Exit, etc. University/Riken/Sansoken NEDO/JST INCJ/A-FIVED Private fund/ Global Enterprises IoP/Buyout Ø Moonshot project cf. awards system/r&d/commercialization l Public Sector :innovation in government projects and administrations Ø Government Procurement Guideline cf. i-construction Ø Institutional Reform ex. Medicine pricing/medical payment system 26

27 Integrated Innovation Strategy Prioritized Fields (1/3) l AI Technology = 5 pillars : R&D/HR/BIG Data /Venture & Implementation /Ethics Ø Human resources development in all levels AI as basic communication tool as reading, writing, arithmetic, with no one left behind basis Ø R&D : Human interface, minute data AI, accountable AI, combination with Robots Ø BIG Data : Society 5.0 data architecture/academic data pool/etc. Ø Human-centered AI social discipline cf. G20 in 2019 l Biotechnology Ø Formulation of new Biotechnology strategy by summer 2019 Key = Shift from deductive to inductive approaches with AI and big data Strength : 3 TOP AI centers/ abundant bio-resources/advanced fermentation technology, etc. 27

28 Integrated Innovation Strategy Prioritized Fields (2/3) l Safety and Security Ø Key : increasing severity of national disaster/fukushima Experience Ø National Resilience Plan 2018 cf. 45 probable cases/tech solution possibility Ø Utilizing wide range of Japan s STI early detection and warning system of the torrential heavy rainfall and inundation, cross-ministerial disaster information sharing platform, etc. prediction and mitigation of Earthquake, Tsunami, typhoon, landslide, volcanic eruption, etc. 28

29 Integrated Innovation Strategy Prioritized Fields (3/3) l Agriculture Ø Open Value Platform on Agriculture Development of smart agriculture, and deployment of smart food chain systems, domestically and internationally Ø Advanced Agriculture Policy :Protection Export Foreign Investment l Environment and Energy Ø Key : Global game change after Paris Accord Ø Priority are -Comprehensive energy management systems = Energy Internet - Unique the hydrogen society ex. utilization of ammonia - Competitive Renewable energy = equivalent cost with fossil fuel l Other important fields Ø Promotion of SIP program, especially in the fields of light quantum, medicine, oceanic, space, etc. 29

30 Thank you for your attention! 30