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Czech Republic - RIO Country Report

RIO Country Report Czech Republic 2015

The annual RIO Country Report offers an analysis of the R&I system in the Czech Republic, including relevant policies and funding, with particular focus on topics critical for EU policies. The report identifies the main challenges of the Czech research and innovation system and assesses the policy response. 

R&I Challenges
Improving the research excellence and internationalisation of Czech science system
Challenge description: 

Czech Republic has increased its public funding to R&D considerably from 0.56% in 2008 to 0.87% in 2014 but mostly due to the increase of the EU Structural funds devoted to R&D. On the output side, however, the Czech Republic is still lagging behind as regards to the scientific excellence. It has close to the EU-28 average number of international co-publications (37.6% with 2013 reference year) and only 5.7% of Czech scientific publications were among the 10 % of publications most cited worldwide (2000-2013, fractional counting). Also in the excellence indicator the Czech Republic has only little improved its scores between 2008 and 2012, virtually no progress has been made towards increasing the number of PCT patents and highly cited publications. Similarly to other countries of the 2004 accession, the Czech Republic FP7 funding share decreased as compared to FP6 and is now at 27.3€/inhabitant higher than the EU13 average of 17.8 €/inhabitant but significantly lower that the EU15 average of 95.2€/inhabitant (StE 2015). The Czech Republic ranks among countries with the greatest share of non-mobile researchers (including transfers inside the country), a share of more than 50% as compared to around 30% in the UK, Sweden or Belgium, whereas mobility is an important factor of increasing research excellence.

Policy Response: 

One of the objectives of the updated national RDI policy from 2013 is to stimulate research excellence and internationalization. Also the Smart Specialisation Strategy from 2014 underlines their importance for the Czech research system. The Czech Republic has designed several intruments supporting the Czech researchers in participation in the EU programmes, EUPRO II being the largest programme, aims at increasing Czech participation in international R&D programs and bilateral activities.The RETURN programme (2009-2019) with €17M of the total budget supports the leading Czech scientists willing to come back the Czech research organisations after a period spent abroad. The new Operational Programmes foresee instruments supporting Czech teams applying for Horizon 2020 funds and other EU-level funding measures. Still, the main funding instrument of the Grant Agency of the CR (basic science funding agency) is a standard grant project, to which are allocated nearly three-quarters of the budget thus about €97m in 2014. Projects aimed at excellence in basic research started only in 2011 and received 17% of the budget, junior grants (started in 2014 and replaced postdoctoral grants) got 11% of the funding and international bilateral grants amount to 1% of the total funding. The interim methodology of institutional funding allocation is already taking into account the excellence by awarding additional points for the awardees of the ERC grants. The Czech Republic has also significantly invested in research infrastructures (cf. National Roadmap of the Czech Republic of Large Infrastructures for Research, Experimental Development and Innovation for the years 2016-2022) also with the aim to attract foreign researchers.

Policy assessment: 

The current public funding allocation system tends to spread thinly the resources with limited incentives for research excellence and therefore fails to achieve critical mass. There are limited financial incentives (RETURN programme) and no regulatory policy measures that encourage brain circulation and opening up of the Czech research system. The attractiveness of the new research infrastructures might need to be coupled with other soft measures in order stimulate foreign and local researchers to seek employment in the regions where those infrastructures are located. 

Finalising the governance reform and introducing an efficient system of allocation of public research funding
Challenge description: 

The reform of the structure of the public RDI system commenced in 2008. The Council for R&D and Innovation (CRDI) has gradually become the central policy actor with increasing competencies and the Technology Agency of the Czech Republic (TA CR) was created to allocate funding for applied research, experimental development and innovation on competitive basis whereas the competitive funding for basic science is channelled through the Grant Agency of the CR. Nevertheless, the Ministry of Education, Youth and Sports (MEYS) and the Ministry of Industry and Trade still manage, through different intermediaries, the Operational Programmes (OP) of the EU Structural Funds. It results in overlapping roles of the Ministries (e.g. similar knowledge transfer programmes managed by the Ministry of Industry and Trade and by the Technology Agency of the Czech Republic – see challenge 3), coordination problems as well as fragmentation of funding. The Czech Republic was also subject of the Council recommendation for stalling its civil service reform. The lack of legislation (implemented only in mid-2015) resulted in high turnover of employees of public administration and problems with building capacity necessary for implementation and evaluation of R&I strategies. Moreover, the reform of the system for allocation of institutional funding is long overdue. The changes in the evaluation system were subject to the Council Recommendations in 2011- 2014. 

Policy Response: 

Pavel Bělobrádek, the Deputy Prime Minister for Science, Research and Innovation announced the plans to form a new Ministry for Research and Innovation in August 2015. A new law on Support for Research, Development and Innovation is under preparation that should clarify the status of the Ministry and improve the coordination in the system. The Czech Agencies for Basic Research and Applied Research will have a joint budget to streamline the funding efforts. The government recently approved a creation of a new funding Agency for Entrepreneurship and Innovation replacing the CzechInvest agency in disbursing the EU funds that are under the responsibility of the Industry and Trade Ministry. The adoption of the Civil Service Law is aimed inter alia to decrease the high turnover of civil servants and enhance the analytical capacities of the public administration.

The Government is preparing a new system of evaluation of the results of research organizations and their institutional public funding. For the transition period 2013-2015 the Government on 19th June 2013 approved the interim methodological guidelines based on a combination of peer review and quantitative evaluation based on research outputs including commercialisation of public research results. The IPN METODIKA project designed a new system of evaluation of research organisations and allocation of institutional funding. Pilot testing of the new methodology has been conducted in 2015. Based on those experiences, a new methodology of evaluation of research organizations will be proposed in 2016 and implemented not earlier than 2017.

Policy assessment: 

The concentration of the RDI policy under the new Ministry is a way to increase the coordination between the RDI policy and its implementation in various agencies. However, the exact role of the Ministry is still not clear, e.g. if the higher education and innovation will be under the competences of the new body. The new addition to the system, the Agency for Entrepreneurship and Innovation operational in 2016 will even increase the number of actors. The first results of the long awaited reform in evaluation of public funding will be seen only in 2017 but the intermediate methodology with the independent peer-review already introduces more balance to the system based previously solely on quantitative indicators. 

Strengthening the public-private collaboration
Challenge description: 

The level of privately-funded public R&D expenditure in Czech Republic is very low (€38m in 2014 (one of the lowest in the EU-28). In 2014 it was only 1.23% of the total GERD. What is even more worrying this indicator displays a declining trend since 2000. Also the share of public-private co-publications is low (just about 1% compared to the EU-28 average of 2.2%, RIO calculations based on Scopus data). The patenting activity of public research organisations has grown in the recent years (from 47 patents granted or receiving validation from the Czech Industrial Property Office in 2008, to 144 in 2011 and 190 in 2012) but the general international patenting activity is increasing much slower (EPO registered 167 patent applications in 2014 (10.6% growth compared to 2013) and granted only 66 patents in the same year while PCT patents numbers are even decreasing. The RIS3 strategy recognizes also the low application relevance of public research which is evidenced by a mismatch between fields with high-impact publications and patenting activity (RIS3 2014).

Policy Response: 

In April 2013, the national research, development and innovation (RDI) policy for 2009-15 was updated and its stress on knowledge transfer and the innovative capacity of the business sector was reinforced.

The Technology Agency of the Czech Republic (TA CR), created in 2009 to support applied research and science-business cooperation, designed programmes to support knowledge transfer. ALFA, Competence Centres, DELTA and EPSILON programmes emphasise as one of their main goal collaboration of enterprises with public research organisations. GAMA programme of TA CR (€69m 2014 -2019) was specifically designed to support the verification of R&D results in terms of their practical application and their subsequent commercial use.

At the same time, the Ministry of Industry and Trade continued the TIP programme, similar to ALFA in 2009-12, and Innovation programme targeted at knowledge transfer. In 2015 it introduced a new programme supporting applied research and cooperation, TRIO, targeting also public-private collaboration. CzechInvest (the MIT executive agency) Innovation programme supports knowledge transfer and PROSPERITY programme, the creation of science and technological parks, TTOs and business angels networks. Many regional governments have implemented innovation voucher programmes

Since 2014 the tax credits that enable enterprises to deduct R&D expenditures from their tax base have been extended to the purchase of external R&D services from research organisations, a policy measure aimed directly at stimulating industry-academia collaborations. Seed fund programmes for researchers are foreseen in the new Operational Programme: Enterprise and Innovations for Competitiveness.

Policy assessment: 

The current weak Czech Republic performance may be attributed to still low incentives for researchers to commercialise its results (see challenge 2) as well as low innovativeness of the business sector (challenge 4). The first results of the evaluation reform may be expected in 2015-2016 as the interim methodology already takes into account patents while evaluating the performance of public research institutions. The new tax credit may increase the volume of privately financed public performed R&D and the effects should be monitored in the next years. The existing numerous support measures need to be evaluated and streamlined in the next funding period. Policy measures supporting horizontal mobility such as traineeships or integration in the organization of industry-oriented PhD programmes are however not yet in place. Equity financial instruments for projects of commercialization of know-how in the research organizations (Proof-of-concept programme) are foreseen in the new Operational Programme Enterprise and Innovation for Competitiveness (OP EIC) under the National innovation fund (NIF).

Increasing the innovativeness of domestic companies
Challenge description: 

The Czech Republic is characterized by high employment in medium-high manufacturing although without major changes since 2008 (11.2% in 2014 compared to 5.7% in EU-28 and similar to Slovakia and Germany). About one quarter of Czech value added comes from manufacturing industry and this sector accounts for two-thirds of Business Expenditure on R&D (BERD).

Still, the majority of BERD concentrates downstream with a predominance of experimental development rather than research and is dominated by a few large foreign affiliates. Foreign affiliates accounted for 55% of all business expenditure on R&D in 2013. This results in a dual economy with R&D intensive multinational companies utilizing imported intermediate outputs and non-innovative and not integrated into the global value chains domestic companies. This is evidenced by the very low share of SMEs introducing marketing/organisational innovations and process/product innovation (25th and 19th in the Innovation Union Scoreboard ranking). Although the Czech Republic fares poorly in the use of venture capital in the IUS, its position should improve given the increased activity of risk investment in the country.

Policy Response: 

TA CR has been established in 2009 as the dominant supporter of applied research and innovation and launched a portfolio of new programmes (most prominently ALFA, Competence Centres and the forthcoming EPSILON) but none of its programmes are specifically devoted to supporting innovation in SMEs. At the same time, the OP EI (2007-2013) funded programmes run directly by the Ministry of Trade and Industry supported knowledge transfer in SMEs (Innovation and Development programmes), while the Cooperation programme financed the establishment of technology platforms and clusters.

In 2014, the Czech government has extended the existing tax credits to external R&D services, i.e. contractual research purchased from research organizations. This change was aimed at stimulating industry-academia collaborations but can also stimulate innovativeness of SMEs which lack human resources and infrastructure in-house. The SMEs are also the major beneficiaries of the existing tax incentives for R&D.

New strategy of the Investment and Business Development Agency Czech Invest from 2011 encourages the internationalization of Czech firms by facilitating global links through its Foreign Cooperation Programme and Gesher/Most programme (designed to support the participation of Czech companies of all sizes involved in R&D in cooperation with their partner companies in Israel). The internationalisation of SMEs is also one of the objectives of the new RIS3 strategy.

CzechInvest provides specialized services to entrepreneurs via the projects: CzechAccelarator targeted on internationalization of Czech innovative companies and CzechEkoSystem focusing on coaching young entrepreneurs.

Policy assessment: 

CzechInvest has managed successfully to integrate management of the EU Structural Funds with FDI and innovation programmes but the creation of the new Agency for Entrepreneurship and Innovation (that will be created by splitting of the roles of CzechInvest) may have an impact on the coordination of those policies. Most of the TA CR funding programmes have been launched only recently and could not yet yield results. Still, the current policy mix is dominated by grant funding with limited efforts devoted to support venture capital or business angels and revolving funds. However, the new programming period foresees a larger portfolio of funding measures that will have to be designed with the lessons learned from the failure of the take up of revolving measures in the 2007-2013 programme.

Chapters
1. Overview of the R&I system

The Reform of the Research, Development and Innovation (RDI) System was launched in 2008. The main success area lies in the upgrading of research infrastructures, while the progress has been slow in promoting excellence, opening the research labour market, reforming the evaluation framework and getting ideas to market.

Despite the economic crisis and major slowdown of economic growth, R&D intensity of the economy in terms of gross domestic expenditure on R&D (GERD) as % of GDP increased from the bottom 1.24% in 2008 to 2.00% in 2014. Since 2011 public funding slightly predominates over the private one but mostly through the intensive use of the Structural Funds. Business and foreign R&D funding, including from the EU Structural Funds, grew rapidly over the recent years, while national public funding of R&D has been stagnating in the recent years. 

2. Recent developments in research and innovation policy and systems

Key developments in the R&I system in 2015 included:

- The Section for Science, Research and Innovations section started operation at the Office of the Government.

- Technology Agency launched the EPSILON programme supporting applied research and experimental development in three priority areas of competitive knowledge-based economy, sustainability of energy and material resources and environment for quality of life, while Ministry  of Trade and Industry approved the TRIO programme to support business R&I and public-private research collaboration in key enabling technologies.

- The new Operational Programmes of the EU Structural Funds were launched.

- The IPN Metodika project proposed a new methodology for evaluation of research organizations and principles for allocation of institutional funding.

3. Public and private funding of R&I and expenditure

The public R&I funding was largely exempted from the overarching budget cuts during the peak of the economic crisis. However, before the financial crisis in the reform agenda of 2008 the government declared plans to keep increasing public R&I funding by as much as 8% annually, therefore in dynamic and relative terms there has been in fact a major reduction of the growth of public R&I spending.    

4. Quality of science base and priorities of the European Research Area

The Czech R&I system is aligned with many ERA policies but it would benefit from larger extent of internationalisation. There are restrictions on access to and portability of grants as public funding agencies support almost exclusively resident researchers. Open access to both scientific publications and data for research purposes hinges on underdeveloped infrastructure and institutional framework.

5. Framework conditions for R&I and science-business cooperation

In 2008, a comprehensible reform of the RDI system was launched refocusing the policy measures on innovation and private-public research linkages. Business investment in research and innovation is not only supported by direct subsidies anymore, which used to be the dominant policy measure but by much broader portfolio of instruments, including R&D tax credits, support programmers for joint public-private research projects or regional innovation voucher programmes. Nevertheless, RDI policies continue to be focused predominantly on the supply side and are rooted in the linear model of innovation.

6. Conclusions

The four identified challenges put forward in the executive summary are summarised in the conclusions. The chapter lists relevant policy actions, assesses their appropriateness, efficiency and effectiveness, and provides links to relevant evidence (based on evaluations or empirical analyses).

Geo coverage
Report year
2015
Country Report file
Official publication date
Tuesday, 3 May, 2016
Last update: 25/03/2017 | Top | Legal notice | Contact | Search