RIO Country Report Portugal 2014

The Portuguese economic and political context continues to be characterised by austerity and slow growth. Although the programme stemming from the memorandum of understanding formally came to an end in May 2014, the process of economic adjustment is still being pursued. The Portuguese economy has been showing some signs of recovery, but the liabilities stemming from the crisis (decline in trust levels, emigration of skilled people, high unemployment) were significant.

While internationalisation has been a priority of national research policies, such orientation was essentially focused on supporting the involvement of Portuguese researchers in international networks and partnerships, or the involvement in international research fora and infrastructures. A more active attitude towards increasing the external coherence and international coordination of national research policies started to arise only more recently, through the supporting of joint activities (INL is a good example), the launching of joint calls with a certain degree of coordination of research agendas (the ERA-Nets are possible examples on this respect), and the alignment of the National Infrastructure Strategy with the ESFRI roadmap.

Historically, Portugal’s R&I strategies have been marked by the framework defined by the successive Community Support Frameworks. In 2014 the Portugal 2020 Partnership Agreement, which will run between 2014 and 2020, was established. It encompasses four thematic OPs (Competitiveness and Internationalisation; Social Inclusion and Employment; Human Capital; and Resource Efficiency and Sustainability) and seven regional OPs. In terms of R&I policy, the most important is the Competitiveness and Internationalisation OP, although the Human Capital OP provides a relevant contribution regarding education, training and lifelong learning, and the Regional OPs have axes addressed to the promotion of research and innovation in the concerned regions.

The NRP 2014 does not provide for major policy changes vis-à-vis the NRP 2013, regarding the objective of strengthening R&D&I. It provides for a set of “emblematic initiatives”, including namely the Strategy for Research Infrastructures in Portugal, the Evaluation and Financing of R&D Organisations, the Revision of SIFIDE II, the system of tax incentives for R&D expenditures, and the Programme for Knowledge and Technology Transfer towards Companies. However, such initiatives mainly concern the FCT and ANI, the National Innovation Agency, not including measures led by the Ministry for the Economy.

With the exception of the private business sector and, to a certain extent, of the private non-profit research sector, the research careers have been highly regulated. The careers that provide access to tenured jobs, both in the public higher education institutions and in the public labs, are regulated by dedicated statutes. As most post-doctoral positions are funded by FCT, these research jobs also depend on regulations provided by FCT. The trend for greater autonomy of the institutions in contracting, that started to emerge a decade ago, has meanwhile been reversed as the financial rules for public contraction have been hardened.

The EU Council adopted a set of Country Specific Recommendations (CSR) regarding Portugal’s NRP 2014. The recommendations regarding Research and Innovation Policy are, however, limited. More specifically, it is recommended to “enhance cooperation between public research and business and foster knowledge transfer”. However, this issue has already been addressed by the Portuguese Government in the design of the NRP 2014 as well as through the strategic reorientation of the ANI and the design of the CIOP.

The main research e-infrastructure in Portugal is b-on, the Online Knowledge Library, which was established in April 2004. b-on allows for unlimited access of researchers in universities and research organisations to international scientific publications through subscriptions negotiated by the Portuguese government with all the major main publishers of international peer-reviewed academic journals. A national policy on open access started to emerge before the end of the last decade.

The framework conditions in Portugal are not very conducive to business investment in research and innovation. The austerity programme implemented throughout the last three and a half years, and which will be pursued (with limited easing) for 2015, together with the significant restrictions in bank lending, especially to SMEs, made business firms’ life very harsh. Partly due to budgetary constraints, the emerging interaction between supply and demand-side policies and instruments has suffered in the last three years. A positive aspect is the policy commitment to promote R&I activities by firms, by keeping the R&D tax credit system (SIFIDE II).

In the context of the NSRF 2007-2013, several measures have been launched to promote knowledge-based entrepreneurship, to encourage university spin-offs and to foster the development of venture capital and business angels. Portugal Ventures has developed initiatives on ignition and regarding the support to business angels. The promotion of science-based entrepreneurship is addressed in Portugal 2020, namely through CIOP and regional OPs.

The National Reform Programme Portufal 2020 set a R&D/GDP ratio target of between 2.7%-3.3% for 2020, with the public sector contributing 1.0%-1.2% and the private sector 1.7%-2.1%. Portuguese GERD (Gross Expenditure in Research and Development) was €2,469m in 2012, the equivalent to 1.5% of GDP. This represents a decline in relation to the previous years. The BERD/GERD ratio has shown a slight recovery (50% in 2012).  Institutional block funding has been declining, while competitive funding altogether (project-based funding and institutional funding dependent on performance evaluation) has been on the rise. The key issues do not seem to be striking a better balance between project and institutional funding, but rather the effectiveness and efficiency of funding allocation.

In the wake of the FCT SWOT exercise, a working process of stakeholders’ consultation, involving academia and companies at equal level, as well as the management of the Competitiveness and Technology Poles and Regional Coordination Commissions, was carried out. This led to the definition of a ‘Research and Innovation Strategy for Smart Specialisation’. The five thematic axes of the Smart Specialisation Strategy are the following: (1) Cross-cutting technologies and applications, (2) Industry and production technologies, (3) Mobility, space and logistics, (4) Natural resources and environment, and (5) Health, well-being and territory. They led to 15 priority themes, which were then translated into specific regional priorities.

Portugal has had operational for several years a network of IPR support services. The GAPI (Industrial Property Support Offices) network was launched in the late 1990s by INPI, the National Institute for Industrial Property. The network was intended to increase the awareness about Industrial Property Rights (IPR) among researchers and business people. The setting out of UTEN (University Technology-Enterprise Network) in 2007, a joint undertaking with the University of Texas, Austin, aimed to provide services for the commercialisation of research outputs oriented toward international markets. The CIOP makes a reference to the development of the market for knowledge as well as to support patenting and IPR licensing. It is expected that ANI might play a role on that regard.

No formal foresight exercises have been undertaken in the period concerned. With regard to evaluation activities, several initiatives in 2013 and 2014 are worth mentioning. Evaluations of key programmes dealing with R&I took place in 2013, the most relevant concerning the Competitiveness Factors Operational Programme- CFOP (‘Compete’) and the Strategic Evaluation of the NSRF 2007-2013 in the fields of innovation and Internationalisation. In 2014, ex-ante evaluations of the Portugal 2020 Partnership Agreement as well as of the thematic and regional OPs that fall under the Portugal 2020 were carried out.

The development of the cooperation between academia and industry have long since been a concern for Portugal’s R&I policy makers. However, this cooperation has been limited. This is due to a host of factors, including the following:  institutional conditions, namely the low level of inter-personal and inter-organisational trust; the lack of systemic policy approaches to deal with the issue; the characteristics of Portuguese companies (much focussed on low knowledge-intensive activities) and universities (with several of them with little concern with industry needs and requirements); and the low incentives for universities’ staff to follow dual careers. The main “emblematic initiative” under NRP 2014 with a likely effect on this regard is the ‘Programme of Knowledge and Technology Transfer towards Companies’ mentioned above. ANI has been assigned the mission to promote technology transfer and University-Industry cooperation.

Available information on the performance of the Portuguese R&I system, namely the Innovation Union Scoreboard, confirms the view that Portugal ranks better in terms of inputs than outputs. The capacity to convert the investments undertaken to enhance innovation enablers is below EU average. Indicators regarding human resources are not very far from EU average; this reflects the investments undertaken to enhance the development of human resources. These are also expressed in the research output indicators, particularly international scientific co-publications, which are much above EU average; this stems from the effort undertaken to support doctoral studies abroad but also stems from the policy to promote doctoral education and the activity of R&D units.

The analysis undertaken has led to the identification of seven key challenges faced by the Portuguese R&I system: (1) Ensuring the sustainability of the research and innovation system; (2) Keeping the trend of improving strategic policy design, systemic density and coordination among the R&I system actors; (3) Maintaining the levels of cohesiveness and dialogue among the players in the research system; (4) Implementing the Smart Specialisation approach in a consistent manner, while avoiding a supply-side bias; (5) Achieving a fast regulation of the policy measures under the Portugal 2020 Partnership Agreement; (6) Stimulating the emergence of new companies, both domestic and foreign-owned, particularly in knowledge intensive activities; and (7) Strengthening the development of SMEs in-house technological, organisational and marketing capabilities.

Portugal’s R&I policy mix is reasonably comprehensive. The provision of managerial support to SMEs is one of the fields in which improvement is needed; the 2014-2020 CIOP and regional OPs envisage measures aimed at improving the quality of SME support. Therefore, the main bottlenecks to respond to the challenges identified are not so much associated to ‘holes’ in the set of measures but to more systemic issues. The efficiency and effectiveness of the policy mix has been seriously undermined by three main types of problems: (1) the still insufficient coordination among the different policy perspectives; (2) the dominance of a ‘linear model’ view, expressed in the drive towards technology transfer measures; and (3) institutional weaknesses, undermining the working of the R&I system, namely the low levels of trust which affect inter-partner collaboration.

The CFOP/’Compete’, under the NSRF 2007-2013, provided a wide spectrum of policy measures aimed at improving the business environment for innovation-oriented SMEs. Besides SIQPME, an incentive system to promote investment projects aimed at SME innovation, modernisation and internationalisation, there were measures to promote cooperative R&D projects involving SMEs and R&D organisations and Innovation and R&TD Vouchers. Other measures to encourage R&D activities are the R&D Teams and R&D Centres, providing financial support for SMEs to set up and enlarge in-house R&D capabilities. CIOP is expected to keep most of the policy measures mentioned above. It is likely to introduce some changes: (1) a stronger emphasis on knowledge and technology transfer measures; (2) a thorough revision of the previously existing clustering initiative; (3) an increased focus on supporting the SMEs product and process development capabilities; and (4) an increased commitment to training-action support for SMEs.

According to the Innovation Union 2014, Portugal’s relative performance in terms of venture capital investments is below EU average. This is not surprising having in mind the limitations of Portugal’s capital markets and domestic market size. The venture capital business is relatively young in Portugal and is not mature. In spite of the public initiatives aimed at promoting venture capital companies and business angels, including the restructuring of public venture capital instruments and the creation of Portugal Ventures, the trend is, according to the IUS 2014, slightly negative (-3.7%). Portugal Ventures has launched an ‘Ignition Programme’, with three strands: calls for entrepreneurship; ignition networks, namely the Ignition Partners Network and the Ignition capital network; and Portugal Ventures abroad, with three accelerators in the USA. On what regards Business Angels (BAs), EBAN Statistics Compendium provides a more positive picture.

In recent years, the concern with the use of public procurement as an instrument to promote innovation has clearly declined. The demand-side initiatives taken in the context of the Technological Plan, namely on renewable energy, electric mobility and public sector innovation, have been to a large extent discontinued. An intention has been expressed to revise the National Strategy for Ecologic Public Procurement, previously defined in 2007. The main changes will concern the enlargement of priority products and the inclusion of new fields, namely food products. These changes are expected to be a driver for the creation of new markets.

The harsh economic climate and the austerity programme have had an impact on the evolution of R&D expenditures. In this context, Portugal is facing significant challenges with regards to its R&I policy and activities. The macroeconomic and business climate has been marked by more than three years of austerity. Portugal needs a vision together with adequate actions to bring the country out of the recession and to move forward. There is widespread agreement that research and innovation are essential to build such a future; however a consensual mobilising agenda has been lacking. These issues are especially acute now, as Portugal is facing a turning point. The end of the Economic Adjustment programme that was formally negotiated with the EC, ECB and IMF, together with agreement regarding a new round of European financial support, which was translated into the Portugal 2020 Partnership Agreement for the period 2014-2020, both provide an opportunity to improve R&I policy in an incremental way.

The research system has been marked by a high degree of centralisation, through fund allocation and political coordination. The regions have had a minor role in the allocation of research funds. This has been changing as an increasing part of the structural funds dedicated to research have been allocated to the regional operational programmes (OPs).

The key ministries in charge of R&I policy are the Ministry for Education and Science and the Ministry for the Economy. The former deals with research policy. The latter is mostly focussed on innovation policy, including the supervision of the OPs addressing economic competitiveness issues (previously the Competitiveness Factors OP under the NSRF 2007-2013, and now the CIOP under the Portugal 2020 framework programme). While for a long time there has been a clear divide between the two Ministries, in the present government cooperation has improved.

The main research funding agency is FCT (Foundation for Science & Technology-. With regard to innovation funding, IAPMEI is the key agency. Agência Nacional de Inovação has also a role in funding applied research, particularly in initiatives aiming at University-Industry cooperation.