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Denmark - RIO Country Report

RIO Country Report Denmark 2015

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

R&I Challenges
Increase university-industry collaboration and improve commercialisation of public research
Challenge description: 

Collaboration on R&D by universities and enterprises, as well as commercialisation of public research can optimise the impact of research and innovation for the economy and society. Denmark's scientific outputs are excellent in overall terms (scoring 81.1 in the EU excellence indicator, well above the 47.8 EU average) and it ranks top in the EU on percentage of highly cited publications. Moreover, of Denmark's eight universities, four are among the top 200 in the Leiden ranking system, three among those are also placed in the Times Higher Education ranking. However, the results for innovation outputs are relatively weak and have declined since 2010. Denmark's rate of public expenditure on R&D financed by business is one of the lowest in the EU and the rate of patents filed by universities and public labs by GDP is significantly below peers in Finland and Sweden and decreasing. Small and medium-sized enterprises (SMEs) are underperforming, particularly on introducing marketing or organisational innovations, as well as on new products or process innovations (both rank 13th). Evidence suggests many university researchers collaborate with industry and engage in knowledge and technology transfer (KTT) activities which is why the overall KTT framework seems to function well. Difficulties in collaboration nevertheless exist, particularly due to different ‘institutional logics’, i.e. university scientists are primarily rewarded for publication output and peer recognition which is not necessarily an outcome of industry-science collaboration, since industry may have an interest in keeping research results secret in order to commercialise.

Policy Response: 

Initiatives that target private R&D investments and public research commercialisation are supported by the Innovation Fund Denmark with its InnoBooster program for SMEs to interact with public science, and innovation networks for SMEs, and support for large demonstration facilities. The strengthening of the GTS – Advanced Technology Group institutes (GTS) was also put in place along with innovation networks, the InnoBooster programme, and establishing Strategic Research Centres. Research collaboration with private companies plays an increasingly important role for Danish universities, usually organised as joint initiatives. Universities are building still more efficient and competent technology transfer offices with the aim of commercialising and ensuring that research results are brought to the market. Since one of the main concerns with such collaborations are intellectual property rights, as part of the growth plan adopted in April 2013, the government increased efforts to diffuse knowledge on intellectual property rights (IPRs) to companies and entrepreneurs, particularly to designers and creative industries, as well as to students. In addition, the independent Productivity Commission, set up from 2012 to 2014 to advise the Government, recommended in 2013 to improve university-industry collaborations on R&D and specifically to improve the legal framework for university knowledge transfer.

Since July 2013, initiatives have also been launched to enhance enforcement of IPR rules by public prosecutors. Finally, standard contracts for commercialisation aim to make it easier for large and small businesses in creative industries to collaborate on the commercialisation of designs and ideas. Evidence shows EU funding schemes enabled Danish companies and universities to build successful collaborations. Funding for activities that would not otherwise have been implemented is perceived as the most important effect, closely followed by cooperation with foreign universities and research organisations and access to new knowledge. Small companies experience greater effects than medium-sized companies and large companies. As many as half of the participating companies launched new products or services as a result of their participation in FP6 and FP7 projects.

Policy assessment: 

The measures above build on more than a decade of policies seeking to turn knowledge into products or services by supporting the commercialisation of public research results. A 2014 evaluation concluded that the legal framework is adequate. Instead, barriers relate to university management, lack of economic and other incentives and cultural differences. The new policy measures address this, but it is too early to say if they are succeeding. An underlying weakness may be a lack of an entrepreneurial culture and education at Danish universities. Accreditation of new entrepreneurship education needs to be prioritised - this has been proposed by the government and an agreement reached in parliament. However, with the goal of increasing patents, the rather low patent intensity of Danish universities, with the exception of the Technical University of Denmark (DTU) and Aalborg University, remains a challenge. University technology transfer offices have different framework conditions and most are subcritical in terms of size of patent and technology portfolios to be commercialised. The formation of spin-off companies is rather low and only the DTU made significant profits from licensing. Only a few universities have defined specific targets on research commercialisation in their performance contracts. More broadly, while cooperation with the GTS institutes has developed very well and cooperation of firms with Danish universities is comprehensive, some Danish firms still prefer to cooperate with foreign universities.

Increase the quality and availability of human resources in R&I
Challenge description: 

An important prerequisite for sustaining growth in prioritised sectors is a critical supply of human resources. Engineers especially are perceived as being essential for future growth of new knowledge intensive sectors. Denmark’s education spending is among the highest in the EU, but this is not matched by STI skills, which lie in the mid-range of advanced economies. Denmark's education system performs above the EU average on most counts, but it has a comparatively low share of highly skilled labour in the private sector. Denmark faces a growing challenge to ensure that more students and graduates will seek private sector employment. More specifically in terms of the research and innovation system, Denmark has a relatively low share of new doctoral graduates compared with Finland and Sweden, and slightly fewer foreign doctoral students. Denmark hasn't traditionally trained a high number of PhDs, and despite good levels, there is potential to increase this, including through enhanced international collaborations.

Policy Response: 

Denmark's policy-makers have focused on this challenge for a number of years and the issue is pervasive in policy debates and documents. Denmark’s national innovation strategy includes a range of initiatives to strengthen innovation capacity through education.

The government anticipates that at least 25% of youth cohorts will complete a master’s degree by 2020, and that the uptake of PhD students will remain at the 2010 level of 2,400 a year. There is room for greater progress however - in 2012, 1,552 graduates completed their PhD.

At the end of 2013, the Danish government established the Quality Committee to look at ways to improve the quality and relevance of higher education, it presented recommendations in 2015. Denmark has also reformed study grants, as well as the Industrial PhD and the Post-Doc programmes to be more responsive to the needs of society and the economy. By including the educational system in the innovation strategy, committing to increase innovation-related and entrepreneurial skills in courses and programmes throughout the education system and setting targets for the share of highly skilled labour in the private sector, the Danish government is already on the right path. The shortage of human resources in STEM subject areas has also been addressed by stakeholders in the private sector.
Denmark’s internationalisation strategy for research includes a number of targeted measures, such as innovation centres in R&D hotspots globally which aim to increase collaborations in R&D fields as well as attract collaborations with companies and universities. There is also Nordic University Cooperation, researcher exchange agreements with Japan and China, a Consortium for Global Talent in collaboration with Danish industry, the Science without Borders programme to bring Brazilian students to Denmark, as well as certain collaborations with developing countries. One example, the Sino-Danish Centre for Education and Research (SDC), was established in 2008 to promote and strengthen collaboration between Danish and Chinese learning environments and increase mobility of students and researchers between Denmark and China.

Policy assessment: 

Denmark is going in the right direction to fulfil its ambitious goals for tertiary education levels and has doubled the number of PhDs, increased university enrolment and improved the strategy for life-long learning. The Industrial PhDs and Post-Docs are an effective measure and have over time been instrumental in facilitating knowledge and technology transfer from academia to industry. However, making further information available on how the various strategies and programmes are monitored and evaluated would enable greater progress in this area by indicating strengths and weaknesses of current measures. One example is the analysis of the PhD training system in Denmark initiated in 2015, to be published during the course of 2016. In terms of increasing attractiveness of researchers to Denmark and boosting international exchanges and collaborations, the Innovation centres have succeeded in creating added value and growth as well as raising international awareness of Danish companies and higher education institutions. Furthermore, the centres facilitate stronger partnerships between Danish and local researchers, higher education institutions and companies.

Support innovation to boost productivity
Challenge description: 

Renewing stronger productivity growth is a challenge for Denmark, as for many advanced economies. With a stagnating economy, and increasing costs from an ageing population and strong welfare provisions, remaining competitive is complex. Research and innovation can support increasing productivity when new technologies are taken-up by the public and private sector, and human resources are well allocated across the performing economic sectors. Infrastructure investment can also support labour productivity improvements. Many advanced economies score low in the level of investment in non-R&D expenditures. Denmark is ranked 27th, which is particularly low and signals a lack of upgrades across the R&D sectors.

On the other hand, public sector innovation in Denmark is among the best in Europe with successful initiatives such as MindLab - a cross-governmental innovation unit which involves citizens and businesses in creating new solutions for society. However, there is significant scope for R&I and infrastructure investments to support improvement in the business sector.
On the output side, exports of medium and high-technology products as a share of total product exports is also rather weak, ranked 19th, which signals a greater need for increasing domestic R&D in key sectors.

Policy Response: 

The government set up an independent Productivity Commission which reported its findings in 2013 and 2014. It proposed a key task for the government is to lay the foundation for strong productivity growth throughout society; both in exporting companies, in domestic business and in the public sector. The objective is that the level of productivity in Denmark in the long term will be close to the top in the OECD. It also recommended improving the quality of training to boost the impact of public research and enhancing university-industry collaborations on R&D. Finally, it proposed giving impact evaluations of R&D programmes a higher priority. Denmark's new Innovation Fund aims to provide efficient and effective funding for R&I. The Growth Fund is aimed at supporting on-going business development in sectors of high societal importance. The Danish government commissioned eight growth teams with members from industry in areas where Danish businesses are or can be internationally competitive. Based on their recommendations the government published specific growth plans for each of the following seven areas: Blue Denmark; Creative Industries and Design; Water, Bio and Environmental Solutions; Health and Care solutions; Energy and Climate; Food Sector; and Tourism and Experience Economy. A growth plan for ICT and Digital Growth remains to be published. The plans address specific barriers to investment and focus on areas in which new markets can be developed. For example, the creation of a single, transparent and efficient means of access to Danish health data could attract medical research to Denmark. In terms of public procurement, the Market Development Fund works to promote methods of innovative public demand in order to spur job creation and growth in Danish companies, including boosting exports. Finally, Denmark’s existing plans have been put together to form its smart specialisation strategy for R&D – including the Government’s growth plans and the regional growth and development strategies of the regional growth fora.

Policy assessment: 

While most Productivity Commission recommendations are broader than R&I policy, some more recent R&I policy developments reflect the commission’s insights. Denmark's new Innovation Fund is seen as a significant step forward in terms of providing efficient and effective funding for R&I.
According to the OECD, weak competition in some sectors and shortcomings in the innovation policy framework hold back productivity growth, notwithstanding high R&D spending, and can hinder participation in global value chains, which is one channel to achieve productivity gains. There is room to enhance innovation policies; including to make sure that some schemes provide efficient support to young and dynamic innovative firms. The Growth Fund is an appropriate measure supporting business development in key sectors. Intelligent public procurement will probably strengthen R&D intensity through demand-pull innovation incentives. Without a single smart specialisation strategy, there may be an increased need for a coherent monitoring and evaluation system to support effective implementation, an important way to boost productivity growth through innovation.

Chapters
1. Overview of the R&I system

The Danish research & innovation (R&I) system has expanded over the last 20 years and its R&D intensity is now one of the highest in the EU. The quality of scientific outputs in Denmark is among the top, however, there are some relative weaknesses on the innovation output side, particularly concerning high-tech exports and SMEs, and in the level and availability of human resources for R&I, notably in the private sector. More broadly, there are concerns in the Danish economy surrounding weak productivity growth. Denmark's Innovation Strategy 2012-2020 aims to shift to a demand-driven innovation policy, enhancing knowledge flows and improving education.

2. Recent developments in research and innovation policy and systems

In 2013, the Danish Government launched Denmark’s first comprehensive innovation strategy “Denmark – a nation of solutions”. Since 2013 there have been no major revisions to the innovation strategy, although a new government took office in June 2015.

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

In terms of 'smart fiscal consolidation', public support to R&I in nominal terms – both budgeted (GBAORD) and executed (GERD funded by the government) – saw slower increases in the aftermath of the 2008-2009 crisis and beyond. The structural balance of Denmark has been positive in recent years. Furthermore, budget appropriations and direct support for R&D from the government have not been reduced, in nominal terms nor as a percentage of GDP. However, the new Danish government, which came into office in June 2015, has reduced the budget allocated to research in 2016, so that it reaches 1.01% of the GDP corresponding to savings of approximately €187m. This may weaken Denmark’s innovation capacity in the longer run.

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

Denmark is aligned with many ERA policies, with a high quality science base, and thematic priorities as well as research infrastructures largely aligned with H2020 goals. There are recent efforts to increase the already good gender balance in research careers, boost internationalisation of R&I and improve open access to research.

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

Measures to support R&D collaboration between the public and the business sector are administered by the Innovation Fund Denmark, established in April 2014, e.g. Industrial PhD and Industrial PostDoc programmes, InnoBooster, as well as public-private partnerships on innovation and strategic R&D projects. Over the last years technology transfer has been strengthened and possible conflicts of interests have been addressed in standard agreements on IPR and in strategic collaboration agreements between universities and industry partners.

6. Conclusions

The three 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
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