OECD Review of Higher Education, Research and Innovation: Portugal

Chapter 1. Assessment and recommendations

1.1. Introduction

Portugal aims to develop a more innovative and productive economy, and to ensure that the benefits of these developments are widely distributed across society and the regions of Portugal. This vision is reflected in a range of national documents including the Government Programme of the 21^st Constitutional Government, 2015-2019 (Programa do XXI Governo Constitucional – 2015-2019). Key aspects of this vision rely upon investment in higher education, research and innovation to achieve two main goals:

1. Rising prosperity. Portugal seeks to improve the provision of higher education and accelerate innovation in its commercial life to raise the productivity of its economy. Innovation should occur through the knowledge-based modernisation of traditional industries, permitting businesses to move up the global value chain and export more effectively; in the further development of newer industries with high growth potential (such as IT or renewable energies); and in public services and civic life, permitting increased effectiveness in governance and greater capacity to address contemporary problems, such as environmental challenges and sustainability. Innovation is to be nurtured by raising the skills of Portugal’s population through higher education and life-long learning, and by widening internationalisation – by making Portugal more attractive to knowledge-intensive foreign direct investment, highly-skilled immigrants and the Portuguese diaspora.

2. Inclusiveness and equity. Portugal seeks to ensure that the benefits of increased innovation and productivity are experienced by all sections of society and all regions of the country, metropolitan and rural.

Portugal made progress toward these goals prior to the 2008 crisis. The crisis resulted in severe reductions to public and private investments in knowledge and innovation. The country’s ability to achieve fully this vision depends upon many factors. Among these are cultural, regulatory and fiscal environments that promote and reward creativity, and investment in the development and application of new knowledge and skills. Equally important is the performance of innovative, productive, internationally oriented businesses, higher education institutions and research units, which operate and are connected through effective networks and supported by sound governance and funding mechanisms and structures.

This second element – which encapsulates the higher education, research and innovation ‘system’ – is the focus of this OECD Review. The key objective of the Review is to assess the extent to which Portugal’s higher education, research and innovation system is well-configured to help Portugal achieve the vision of inclusive innovation, and to identify which policy options might help it achieve its goals.

The review focuses on the structure and operation of higher education, research centres and innovation-related bodies that form a core part of the higher education, research and innovation system, as well as direct public support for research and innovation in the business sector and public services. While the broader legal, regulatory and fiscal environment – such as immigration or intellectual property rights policies – also influence the capacity of firms and public services to invest and innovate to promote economic and societal development, these are outside the scope of this review.

1.2. What does an effective HERI system look like?

Different national economic and social contexts mean that what works in higher education, research and innovation in one country may not work in another. There is no single recipe for success that can be applied internationally. However, in order to provide a meaningful assessment of the performance of the Portuguese HERI system – a view of what is working well and less well – and to formulate appropriate recommendations, some criteria against which to judge performance are required. We therefore draw on knowledge of effective HERI systems worldwide and the many insights gained through the research and fieldwork in Portugal to develop a set of broad features that would characterise an effective HERI system in the Portuguese context. These core characteristics, which frame the assessment, can be summarised as follows:

1. Opportunities and incentives for engagement and co-operation across the system. In successful systems, a wide and appropriate range of people with relevant knowledge and interests are involved in formulating and agreeing objectives, implementing activities and adjusting strategy and implementation to changing circumstances. Successful systems are characterised by strong co-operation across institutional and organisational boundaries. This includes effective co-ordination and co-operation between different parts and levels of government (horizontally between different ministries and agencies, and vertically between national and regional authorities), and between public authorities, higher education and research institutions, businesses and civil society.

2. Clarity of objectives and steadiness of rules and policy. Successful research, innovation and higher education systems are guided by a clear and shared vision of overall objectives and characterised by a stability and predictability – by steadiness – in the main strategic, regulatory and financial frameworks in which organisations and individuals operate. This enhances the level of trust between the different actors of the system and permits them to set and act upon medium to long-term plans – for hiring, investing, co-operating – with confidence. Operational entities within the system – such as research units or higher education institutions – also establish broad strategies to provide additional clarity about their specific missions and goals and help frame the work of their staff.

3. Internationalisation. Successful systems are open and attractive to the world. This means not only that there is strong co-operation between players in the national system and partners in other countries, but that the system is able to both attract talented researchers, teachers, innovators and entrepreneurs from abroad and ensure the international mobility of their domestic counterparts. Internationalisation is seen as a particularly important characteristic in Portugal, given the country’s comparatively small size, tradition of openness and dependency on international trade.

4. Adequate and stable resources, joined up to incentives for good performance and accountability for results. Organisations and individuals in successful systems have access to adequate and predictable financial, human and knowledge resources to allow them to undertake their activities effectively; where and when public intervention is justified, they are supported and incentivised to achieve good performance against agreed goals; and held accountable for the results they achieve.

5. Flexibility, adaptiveness, and differentiation. Within the stable and predictable frameworks highlighted above, successful education and research systems allow organisations and individuals act with flexibility, differentiating their institutional profiles, teaching, research and innovation-related activities to respond to the needs of their target populations, community, region, or global knowledge partners. Adequate flexibility and differentiation are particularly important for achieving objectives related to social and territorial cohesion, as teaching, research and innovation need to be adapted to the needs of particular individuals and particular places. The legal, regulatory, and funding frameworks within which organisations and businesses operate permit them to work with agility and are responsive when individuals and organisations need to adapt their activities to changing circumstances.

The strengths and weaknesses of Portugal’s higher education, research and innovation system were examined in light of this framework,1 with chapters focusing on six inter-related aspects of the system:

• Chapter 3 - Governance, Strategy and funding in the HERI System: examines the overall strategy that has been agreed at system level, the structures in place that allow strategy to be agreed, implemented and amended over time, and the availability and allocation of public resources for investment to support achievement of the overall strategy.

• Chapter 4 - Missions, profiles and resource use in : examines missions and strategies of higher education and research institutions and the ability of institutions and staff to effectively design and implement activities that respond to the needs of the population groups and regions they work with and contribute to institutional and national goals.

• Chapter 5 - Higher education provision, access and support mechanisms: effective undergraduate and Master’s level education is crucial for supplying the large body of skilled people needed by modern economies.

• Chapter 6 - Doctoral training: the quality and relevance of training for PhD candidates and the ability of doctoral graduates to access quality jobs where they exploit their skills. The availability of trained researchers and specialists may be seen as a factor in further developing national research capacity and stimulating innovation.

• Chapter 7 - Academic carreers: examines the extent to which the conditions and the organisation of employment in higher education and public research institutions contribute to the effective deployment of skilled people and allow staff to pursue fulfilling and productive careers.

• Chapter 8 - High-skilled employment, co-operation with HEIs and innovation in the business sector: examines activities designed to support the development of innovation and the kinds of high-skill employment that support innovation in the wider economy in Portugal, in the business sector and public services.

1.3. Governance, strategy and funding in the HERI system

The ability of individuals, teams and institutions engaged in education, research and innovation activities to perform their roles effectively is influenced to a considerable extent by the strategy and funding environment in which they operate. Effective governance arrangements and practices are essential to ensure strategic and policy decisions are made with adequate co-ordination between different parts and levels of government.

These should result in a clear mid- to long-term vision, concretised in ambitious and realistic objectives and plans to inspire and guide higher education, research and innovation actors. The latter, along with a broad set of stakeholders, should be involved with policy makers in the development of this strategy. Its effective implementation depends in great part on the country’s capacity to set up a stable and efficient framework for allocating resources to tertiary education, research and innovation actors based on the collectively established national priorities and monitoring of their execution and effects.

Policy Issue 3.1. There is no overarching and coherent national strategy to guide the system in the mid to long term

The formalisation of the governance structure of the higher education, research and innovation system in Portugal started later than in other European Union (EU) countries, following Portugal’s accession to the European Economic Community in 1986. This process, driven in large part by the requirements set by the European Commission to steer and manage the different generations of Structural Funds, resulted in a multiplicity of strategic plans and priorities. Several strategic documents coexist, at different levels and covering various components of the system (research, innovation, specific sectors). This contrasts with other OECD countries, such as Germany and Norway, which have developed authoritative, if not unique, national research and innovation strategies. There is a clear divide between strategies related to research and innovation, reflecting the silos in which the ministries in charge of these policy fields operate, and each ministry has only limited monitoring, evaluation and foresight capacity to support the development of these strategies.

This crowded and fragmented strategic landscape has several harmful consequences. First, there is no clear, overarching and shared national strategy in place to provide a vision and guide the higher education, research and innovation system in line with national priorities. The coexistence of several distinct strategies has led to multiple, sometimes inconsistent, messages and goals. Second, this makes it difficult to prioritise and target resources to create critical mass in areas where the country’s research and higher education systems can excel. Finally, these many strategic initiatives, which accumulate with no action plan and little monitoring, fail to provide a stable mid-term financial framework that allows research organisations to operate and invest confidently in ambitious research, innovation, and higher education activities.

The 2018-2030 Innovation Strategy adopted by the Council of Ministers in March 2018 is a positive development as it covers the research and innovation policy fields and sets economic development targets, although not always precise. However, the document is very short and broad, only available as an annex to a resolution of the Council of Ministers. Apart from referring to already existing programmes and initiatives, it does not provide information on actions and resources. These features make it unlikely that the Innovation Strategy will provide either the overall vision or the roadmaps of future actions. It could however, if implemented and monitored, be useful as an inter-ministerial co-ordination tool.

National policymakers have taken strategies initially developed to guide the allocation of Structural Funds and used them to support key performance indicators (KPIs), as well as monitoring and evaluation. This is done, for example, in the “Research and Innovation Strategy for Smart Specialisation” adopted in November 2014. The result is a document in which strategies are too procedural and centered on implementation issues to provide a comprehensive and aspirational vision for the development of the national higher education, research and innovations system.

International experience shows that the benefit of a strategy often stems as much from the process of creating it as from its results. Strategies are not the result of a top-down approach that imposes priorities; they should engage a broad range of stakeholders, from the research community, funding agencies, business, and civil society to regional and local governments in policy making and implementation. Portugal has made recent progress on this regard. Although it is too early to assess these initiatives, the participatory approach adopted to develop the 2014 Smart Specialisation Strategy, along some recent national initiatives, mark a shift in policymaking style toward a greater participation of stakeholders in higher education, research and innovation policy.

Recommendation on establishing an overarching national strategy

3.1. Adopt an overarching National Strategy for Knowledge and Innovation covering and providing clear guidance to higher education, research and innovation funding and steering organisations

Based on an appropriate bottom-up consultation and engagement process, a dedicated high-level task force should oversee preparation of a formalised National Strategy for Knowledge and Innovation for Portugal. This strategy should not only make it possible to set priorities in line with socially desirable goals, but also set a predictable and stable funding framework (see recommendation 4 below) and improve the co-ordination and communication among the main government bodies. This document should include:

• A vision of how the Government wishes to see the Portuguese economy develop through innovation in the next decade, including identification of sectors with greatest growth and innovation potential.

• An assessment of the broad skills and education attainment profiles, research capabilities and collaboration with firms and non-profit organisations that will be needed to support the development trajectory the government wishes to see.

• An account of the regional and social dimensions of education, research, innovation, and on the prospects for the benefits of increased productivity and innovation to be shared.

• An assessment of the capacity of Portugal’s higher education, research and innovation actors to support the nation’s innovation policy goals.

• Identification of the overall funding levels that the nation’s higher education, research, and innovation actors are likely to need to achieve. The initial timeframe for the actions could be four years, with a broad multi-annual budget allocation attached.

• Specification of procedures for monitoring progress against the goals for the strategy and for periodic revision of both global objectives and specific actions (after the initial four-year timeframe).

The national Knowledge and Innovation Strategy should provide a clear framework to guide the internal strategies of implementing bodies and funding agencies under the MCTES and Ministry of Economy (such as the FCT and ANI), while leaving these bodies adequate room to devise the best policy tools and precise prioritisation of actions to achieve the overall goals. The Ministry of Planning and Infrastructures should also be involved to establish effective linkages with EU Cohesion Policy.

The timing of the Strategy should make it possible to set long-term orientations as well as actions required in the short- and medium term. Following the example of the Norwegian Long-term plan for research and higher education, a national strategy could have an eight to ten-year time horizon, with a rolling cycle of revision every four years. Another option, similar to the Spanish National strategy for research and innovation, would be to have an overarching strategy with an eight to ten year time horizon, with four-year research and innovation implementation plans providing more detail on specific objectives, defining the instruments, and funding, etc.

The timing of the Strategy should also be properly aligned with the ESIF programmes. The main orientations included in the new Knowledge and Innovation Strategy should be the basis for the development of the content of the next generation of Operational Programmes for EU Structural Funding for the period 2021-2028, in particular in the ‘competitiveness’ and ‘human capital’ areas.

Policy Issue 3.2. The capacity to develop an overarching strategy and set priorities is hindered by insufficient co-ordination across government

The absence of an overarching national strategy and weak priority‑setting results, in part, from a lack of horizontal policy co-ordination. Mechanisms that ensure coherence of decisions between the government departments and policies dealing with higher education, research and innovation and between these departments and those responsible for broader economic, social and regional development policies are not sufficiently developed. As in many countries, the divide is particularly prominent between the research and innovation policies.

This appears clearly in the co-existence of three distinct advisory councils, the Co‑ordinating Council for Higher Education (Conselho Coordenador do Ensino Superior) (CCES), the National Council for Science and Technology (Conselho Nacional de Ciência e Tecnologia) (CNCT) and the National Council for Entrepreneurship and Innovation (Conselho Nacional de Empreendedorismo e Inovação) (CNEI) in charge respectively of higher education, research and innovation. In practice, under the current government, the two latter councils have met infrequently and the CCES has become de facto the only active advisory council to the MCTES, touching on subjects that go beyond the theme of teaching and learning. It however lacks the clear mandate and sufficient resources to act as an independent advisory body which combines higher education, research and innovation. Similar silos exist at ministry levels. At funding agency level, the participation of the MCTES, via its research agency FCT, in the joint board overseeing the National Agency for Innovation (Agência Nacional de Inovação) (ANI) theoretically allows for some co-ordination between the two ministries in the area of innovation. Interviews conducted among agency staff and members of its governing bodies tend to show that this “hybrid” governance of ANI has had little effect on bridging the gap between research and innovation policies.

Portugal stands out due to its absence of clear formal institutional arrangements that can support high-level, cross-ministerial co-ordination, planning or decision-making. While administrative and policy silos exist in many countries, the latter have often set high level advisory and co-ordination bodies with a broad remit. Co-ordinating bodies in Portugal cover only part of the higher education, research and innovation system. These bodies are often linked to a particular government and have a limited longevity that does not allow them to establish firmly their legitimacy.

Another divide results from the fact that some other ministries have direct competence in the area of R&D, in particular via the State Laboratories under their direct control. However, some State Laboratories are jointly co-ordinated with the MCTES and the sector has been significantly reduced in recent years, limiting the impact of this divide.

The considerable volume of resources from European Structural and Investment Funds (ESIF) in Portugal dedicated to higher education, research and innovation means that the strategic and operational bodies to administer these funds are important actors in the strategic governance and implementation of policies in these fields. This specific structure of governance has improved in response to repeated criticisms regarding the lack of co-ordination between the related Programmes (Competitiveness, Human Potential, etc.). However, the governance structure put in place for Structural Funds is primarily ensuring effective disbursement of funds in line with Operational Programmes, which have been agreed with the European Commission.

Recommendations to strengthen national co-ordination

3.2. Establish a high-level task force at inter-ministerial level to take political responsibility for development of the shared national knowledge strategy, taking into account stakeholder input

Establish a task force at the inter-ministerial level bringing together, at a minimum, the Ministers for Science, Technology and Higher Education; Economy; and Planning and Infrastructure, to take responsibility for the development of the new national Knowledge and Innovation Strategy. Direct involvement of the Minister of Finance would be beneficial, providing the body with input with respect to macroeconomic and fiscal constraints.

The high-level task force with the initial task of developing and adopting the Strategy should be established for a fixed length, meeting formally every few months. A secretariat of policy and analytical staff drawn from respective ministries should support the task force.

While principally responsible for the development of the Strategy, the task force could be a first step toward a permanent inter-ministerial co-ordination council that would provide orientations of the higher education, research and innovation policies in a horizontal setting.

For a national knowledge and innovation strategy to be effective, it must be informed by the expertise and perspectives of those working directly in knowledge-intensive sectors of the economy and those who carry out research and education, taking into account the views of a wider range of relevant stakeholders.

To engage knowledge and expertise in the country – and to ensure a future knowledge strategy has wide support – the high-level ministerial task force should organise a wide-ranging consultation and engagement exercise, going beyond the sectoral consultations so far undertaken on elements of current strategy. Existing sectoral advisory groups, including the Co-ordinating Council for Higher Education can play a key role in convening stakeholders and providing input to this process. The secretariat supporting the task force should prepare a consultation document – equivalent to a green paper – outlining initial proposals and options for the priorities and action lines for a national knowledge strategy, to which stakeholders can react. The consultation exercise could involve a combination of moderated discussion events and written submissions. The process of preparing the consultation document, undertaking the consultation and collating input is likely to take at least 12 months.

3.3. Strengthen analysis, foresight and management capacity in government

The development and monitoring of a national strategy should be informed by accurate information on what is happening in innovation, research, and education, and by foresight on developments in the international economy and technology. To meet these needs, an analytic unit drawn from ministries responsible for the strategy’s development and implementation should be established. This unit should provide ministers a detailed report every two years. These reports should inform the process of periodic revision of the national knowledge and innovation strategy, every four years, for example. The monitoring of public expenditure related to the strategy would be facilitated by the creation of a specific budget category in national accounting protocols, consolidating spending on Higher Education, R&D and Innovation.

Policy Issue 3.3. The future role of State Laboratories in Portugal’s research system is unclear

Over the last 20 years, the importance of State Laboratories in the Portuguese research system has been reduced, as staff numbers and budgets have fallen. Despite these changes, State Labs still represent a significant investment of public resources. However, there is no overall strategy guiding the work and future development of State Labs and limited coo-peration between them. Rigid staff regulations also hinder their ability to respond rapidly to changing requirements.

As in most countries, the ability of the government to steer these research institutions, mainly through competitive funding incentives, is limited, especially when it comes to enhancing their contribution to addressing the mounting societal challenges. Several countries have reformed their government sector to better address the challenges related to climate change, aging, food security, etc.

Recommendation to ensure the contribution of state Laboratories to the national strategy in HERI

3.4. As part of the renewed national knowledge strategy, define the future role of the state laboratories with a view to maximising their contribution to Portugal’s development and addressing societal challenges.

The development of the new national knowledge strategy (Recommendation 1) should include a comprehensive review of the role of the State Laboratories and the formulation of a clear development strategy for these bodies. Portugal can seek inspiration from other OECD countries in its efforts to steer and modernise its public research sector. In Spain, for example, state laboratories have been brought under the direct supervision of the ministry in charge of research and the researchers were integrated into a single research professional group in order to favour inter-organisational mobility. In Sweden, government research institutes have been transformed into non-profit companies and all their shares transferred to a common umbrella body, itself a non-profit company (RISE – Research Institutes Sweden). The role of the umbrella body is to maintain a dialogue with business and the co-owners, steer the RISE institutes, allocate strategic development funding, represent the institute sector in various contexts, lead the branding effort in Sweden and internationally and to evaluate the benefits and impacts of the state’s investment in RISE. Another option would be to established performance contracts for all the state laboratories.

Policy Issue 3.4. The resources allocated to higher education, research and innovation are not aligned to an overall strategy or the level of ambition of the government

Once an overarching strategic framework has been set, policy implementation comes down to the commitment of financial resources that are commensurate with the level of ambition and in line with the strategy in place.

The financial crisis of 2008 put a halt to the strong and unprecedented increase of public and private R&D investment during the period 2000-09. Gross expenditure on research and development from all public and private sources has fallen drastically, before picking up in the last two years. However, these funding increases appear far from sufficient to meet the very ambitious objectives related to European convergence recently set by the government in 2018. This goal would require multiplying public R&D expenditures by two and, even more challenging given the structure of industry and the nature of the labour force, private R&D expenditures by four. This represents a level of growth of funding over a duration that Portugal has not previously achieved, even prior to the crisis. Experience shows that setting R&D intensity targets that engage actors is a delicate process, where ambition and realism must be balanced so that they are deemed credible and can become a shared national goal. Moreover, such growth would not consistently contribute to innovation and productivity growth if made using existing governing mechanisms and allocation processes. Major reforms will be required to change the structure of industry and services, as well as to reform the governance of the public research sector.

Of equal importance is the stability of the funding being allocated, so that HERI actors can plan their activities in confidence. Not only have funding levels in Portugal proved unpredictable, but funding methodologies and criteria change frequently, complicating planning and access to finance for research organisations and firms.

Finally, funding schemes should be accessible without disproportionate costs and administrative efforts, which is not the case in Portugal where the complexity of the management of the R&D funding programmes and the administrative burden for the applicants has increased significantly. The increased efforts needed to participate in competitive schemes combined with decreasing success rates act as a deterrent to participation in public support programmes.

Policy Issue 3.5. Funding allocation processes at agency level are not adequate to implement national priorities

To have an effect, the research and innovation priorities set at the system level – by government in consultation with stakeholders – need to be translated into relevant activities on the ground. One key ‘transmission belt’ of these priorities is the funding allocated by agencies. In Portugal, the FCT has been an influential actor from the very early years of the development of the system, well before the agencification process that most OECD countries have experienced in the last two decades. It is by far the main actor for the competitive funding of research at institutional, project and individual researchers levels.

The dominant funding approach, in the system as a whole and within FCT more specifically, has been ‘bottom-up’. Research proposals are selected based primarily on merit, without any ex-ante prioritisation of research domains and disciplines. Although selection based on excellence is a feature of the most efficient research system around the world, the lack of explicit allocation criteria for the resources among thematic areas results in a scattering of resources and does not allow the government to support the transformation of the HERI system in line with national development goals.

FCT effectiveness is also hindered by the types of linkages established, upward, with its line ministry (MCTES) and, downward, with the research communities. This configuration results in a low level of effective autonomy of the agency vis-à-vis both its ‘principal’ and its ‘beneficiaries’:

• There is no formal process for the ministry to convey strategic orientations and targets to its research agency and the head of FCT is also responsible for serving as the Director General for Research at MCTES. In many OECD countries, agencies are separate from their line ministry, and are governed by performance contracts negotiated between the agency and the ministry.

• The independence of the FCT from the scientific communities represented in its Scientific Councils is undermined by the agency’s internal governance arrangements. These are characterised by fragmentation between disciplines and the absence of strong power at the strategic management level of the agency.

Recommendation to ensure predictable and strategic funding environment for the HERI system

3.5. Use the Portugal Knowledge and Innovation Strategy to set a predictable funding environment for the nation’s higher education, research, and innovation system.

The analysis and advice of task force – based upon wide engagement across relevant Ministries within government and careful wide public consultation – should provide government, with the endorsement of Parliament, with an opportunity to establish a high-level, multi-year commitment of public funding in support of higher education and research. With this funding framework agreed, MCTES can deliver multi-year research funding through FCT and educational funding through its institutional subsidies in ways that predictable, aligned to national priorities, and at a level adequate to achieve needed reforms identified in the review.

While the Knowledge and Innovation Strategy would have a long-term time horizon, the funding framework linked to it would be for a shorter duration, such as four or five years. In Norway or Spain, for example, a national strategy contains a long-term perspective for and a mid-term rolling plan with financial commitments. The strategy is revised every four years for instance, adapting the long-term orientations as needed, and agreeing upon a new funding framework for the four years to come.

3.6. Reform the FCT, increasing its capacity to effectively balance national research priorities and the priorities of the nation’s scientific research communities.

The institutional arrangements between FCT and MCTES should allow the ministry to provide clear guidance and associated resources to the agency on a multi-annual basis and monitor the performance of the agency in implementing these orientations. Such arrangements could take the form, for instance, of multi-annual letters of assignment or performance contracts negotiated between FCT and MCTES, setting out clear objectives and planned resources in line with the national knowledge strategy.

The independence of FCT in the fulfilment of these objectives should be strengthened by institutional reforms such as the dissociation of the roles of Director General for Research Planning and President of FCT. More radical reforms could also be considered, including a change of the current ‘Public Institute’ status of FCT, which provides only limited administrative and financial autonomy, into a public Foundation status. The latter option would also increase its operational flexibility.

The capacity of FCT to put in place the necessary measures to fulfil the objectives assigned to it should be also strengthened by changes of its internal organisational structure to ensure increased autonomy vis-à-vis the scientific communities it funds. A key condition of this autonomy is a clear separation between the “scientific evaluation” bodies and the “decision making” bodies that assign the indicative allocations of resources per areas, instruments. Potential options include notably the creation of an FCT “General Advisory Council”, with a broader scope and stronger role than the current Conselho Consultivo, and changes to strengthen the FCT “Governing Board” (Conselho Directivo) with the appointment of additional members.

Wider autonomy vis-à-vis funded scientific communities should be complemented by a review of its scientific panel structure, to ensure that the FCT is capable of responding effectively to new knowledge needs, and to a range of research communities that are applied, clinical, or transdisciplinary.

1.4. Missions, profiles and resource use in HEIs

High-performing research and innovation systems have higher education institutions that have profiled themselves in areas of activity where they are strong – or have clear potential to be strong – and are differentiated from other institutions with similar missions in the system. Further, their HEIs engage with external partners at regional, national or international level in ways that are aligned to their mission and profile.

Well-profiled higher education institutions result from well-designed public policies. Specifically, they arise from legal, regulatory and financial frameworks that provide clarity about the missions of HEIs, establish institutional autonomy sufficient to permit institutions to set their profile, support leadership and management capacity to implement these strategies, and allocate resources in a way that is stable, sufficient, and linked to good performance and accountability.

Systems that function in this way benefit society. They do this by ensuring adequate diversity in the types of education provided, by responding effectively to the distinctive needs of their localities and regions, by avoiding unnecessary duplication in teaching and research to increase efficient use of resources, and by encouraging the concentration of activities to create internationally competitive centres of excellence in research and innovation.

Policy Issue 4.1 Portugal’s balance of higher education institutional missions is imperfectly aligned to its national and regional needs

Higher education systems that have a network of higher education institutions with strategically differentiated missions are best able to meet a wide range of national needs, including diversified educational provision, high quality research activity, and regional engagement.

Portugal’s modern higher education system was planned to have a clear binary line, organized by areas of conceptual knowledge (universities) and professional knowledge (polytechnics). However, in the decades since the inception of its binary system the missions of Portugal’s higher education institutions have become overlapping, and less differentiated than is possible. Its public higher education institutions tend to attempt a wide range of disciplines in their educational offering at the first degree (undergraduate) level, rather than specialising, and to offer instruction across a range of study levels, rather than concentrating on one part of the study cycle. This is driven, in part, by pressure to maximise enrolment and the fee income that comes with each enrolled student, and by a desire on the part of institutions to shape and enhance their reputation. It also results from the limited use of ministerial steering to maintain and shape the nation’s binary divide. The funding methodology used to support the core operations of higher education institutions does not take account of institutional teaching and research profiles, and the ministry does not have a process by which its reviews and approves new programmes in public higher education institutions with a view to their alignment to institutional mission and profile.

While Portugal has a growing research output led by its universities, many of the nation’s 14 public universities have modest research profiles, and award few doctoral degrees in a limited number of fields. Conversely, some programmes or schools within polytechnics have significant research programmes, host or participate in R&D centres, and collaborate in training or hosting doctoral students from Spanish or Portuguese universities.

Growing relationships between universities and polytechnics in the training and hosting of PhD students and the widening participation polytechnic researchers in R&D Centres and Associated Laboratories together point to emergent model (or models) of doctoral education for polytechnic institutions. For example, one model would be to authorise doctoral awarding authority for selected polytechnic programmes or colleges. This authority might award a programme or college when conditions satisfies certain conditions of excellence and relevance. These first of these conditions could include participation in a multi-institutional doctoral programme with a public research university; hosting an FCT R&D Centre evaluated as very good or excellent, or participation in an Associated Laboratory. The second condition might be assured by having external stakeholders evaluate the proposed programme to ensure that it is distinctively professional or practice-focused in its profile.

Recommendations on modernising the diversification of institutional missions

4.1. Rebalance the missions of Portugal’s higher education institutions to ensure that nation has a diversified network of institutions, the missions of which are well-aligned to national and regional needs.

Continue lines of policy from the past decade that have been effective in developing diverse capacities, including establishing a PhD requirement for polytechnic academic careers, supporting applied research through the Polytechnic Modernisation and Valorisation Programme, and awarding R&D centre designations to leading polytechnic research groups. International experience with initiatives such as the Modernisation and Valorisation Programme suggests that about five years of support are required to achieving substantial and lasting change through targeted grant making.

Develop a regulatory capacity in MCTES to systematically review and approve new educational programmes at the bachelor level and integrated master degree levels to ensure they are well-aligned to the mission of institutions in each sector, and to the institution’s own strategic profile. This process should be clearly differentiated from (though complementary to) external or internal quality assurance procedures, and operate with clear and simple rules that permit institutions to take forward new programme proposals with confidence that alignment to mission and profile will result in swift approval. Alternatively, MCTES could continue rely upon the annual allocation of additional study places to public higher education institutions through the despacho orientador to ensure that programmes offerings are aligned to national policies. It could make this a more effective instrument of steering by providing public and prior guidance to institutions about its allocation priorities, and grounding these priorities in the nation’s education, research, and innovation policy framework.

Modify, as necessary, the legal basis of accreditation and quality assurance processes administered by A3ES to ensure that its reviews adequately differentiate between theoretically-oriented university study programmes and practice-oriented professional education.

Review the organisation of postgraduate and its relationship to the knowledge and innovation needs of the country. Reassess responsibility for the conducting postgraduate education, for its funding, and for the assurance of its quality.

As part of this review, consider revising the legal basis for polytechnics, permitting the carefully controlled award of doctoral degrees by polytechnics. This should be permitted in applied research fields where institutions have a clearly demonstrated capacity to do so, and where there is a strong economic rationale for the offer of doctoral awards. Where there is a close connection between the work of polytechnics and universities – in fields such as agriculture – consideration should be given to joint doctoral programmes between universities and polytechnics.

A strictly controlled and strategically guided process of doctoral authorisation at the level of school or faculty -- rather than the polytechnic as a whole -- is advisable. The authorisation process should require a clear demonstration of capacity for high quality doctoral training, evidence that the programme is aligned to the institutional profile and mission, and relevant to the economic and social needs of external stakeholders served by the institution. A programme approval process could require, for example:

• Approval by the polytechnic’s President and General Council, in which the proposed doctoral programme is clearly linked to the institution’s profile;

• Review by A3ES (as is done for university PhD programmes);

• Participation of the programme’s academic staff in R& D centres recognised as very good, excellent, or exceptional by the FCT.

• Participation of the academic staff in a multi-institutional graduate school, organised along lines of discipline or professional specialisation, on the model, e.g. of doctoral training programmes in the Netherlands.

• An externally reviewed motivation for the proposed PhD demonstrating a close connection between the doctoral programme, professional practice and regional needs. This process would look for representatives of industry, the public sector, or voluntary organisations to identify how the high-level skills of doctoral recipients would be used to improve their organisation’s products, processes, and practices.

A review of post-graduate education could consider applying many of these principles more widely, to university institutions.

Policy Issue 4.2. Higher education institutional autonomy and responsibility have expanded, but remain insufficient

Public HEIs in Portugal enjoy a moderate degree of autonomy in organising their internal management and structures in comparison to those in some other European countries. However, the level of institutional autonomy in many other key areas remains limited in Portuguese universities and polytechnics, particularly in public institutions that have not transitioned to foundation status. National legislation governing public sector employment, public procurement and financial management are burdensome, and limit the ability of institutions to plan and manage their operations efficiently and effectively.

Foundation status, expected to transform institutional autonomy, has accomplished less than expected. Take-up of foundation status has been slow and limited – ten years after the adoption of RJIES, only five public universities have obtained foundation status. At the time of the review, no polytechnic institutions had obtained foundation status. Universities have made limited use of the legal opportunities that foundation status provides to develop a workforce and career structure under private employment law, most especially among academic staff.

Legal uncertainty persists concerning key aspects of foundation status that impair its wider adoption and effective use. Uncertainty about the extent to which staff working under public and private labour law are required to have parallel conditions for advancement and compensation has led institutions to eschew private law hiring. Additionally, some foundation universities report that uncertainty about the status of private donations to universities – whether private donations are treated by state budget authorities as fully fungible with public funds, and therefore subject to “captivation” – has hampered the development of private donations to universities.

Recommendation on strengthening the autonomy of HEIs

4.2. Strengthen the legal basis of autonomy for public higher education institutions.

Pursue full implementation of the foundational status for HEIs and take additional measures to increase flexibility in financial management and procurement for public higher education institutions.

As a matter of priority, MCTES should pursue five initiatives to deepen and widen institutional autonomy.

a. To improve the effective use of foundation status among institutions that presently have foundation status, the analysis and recommendations put forward by the Co-ordinating Council for Higher Education should be implemented. The financial management provisions originally agreed by the Ministry of Finance in 2009 when foundation status was first awarded should be put on a statutory basis though amendments to the State Framework Law.

b. To support the effective management of all public higher education institutions, the rules of financial management agreed with Finance Ministry should be put on a continuing basis, rather than subject to annual renewal in the State Budget Law;

c. The Official Plan of Public Accounting for the Education Sector and the Public Contracts Code should be appropriately modified so their provisions do not apply to institutions with foundational status.

d. In near to mid-term future, Portugal should aim to extend foundation status to all of its higher education institutions. This will require that it revisit the criteria that it uses when proposing institutions for foundation status.

e. New tests for sound financial management should be adopted that permit all well-managed public higher education institutions to achieve foundation status. Revenue diversification is an unnecessarily restrictive proxy for an institution’s capacity to manage soundly their finances; it effectively prevents many of Portugal’s higher education institutions obtaining foundation status. With sound tests for financial management capacity and wise hedges against risk – such as requiring institutions to carry a reserve or “rainy day fund” -- budgetary balance need not be put at risk.

Policy Issue 4.3. Public spending is provided in a way that hampers sound financial management by higher education institutions

Providing core public funding for education and operations to higher education institutions on a historical basis makes the funding of institutions opaque, and establishes a weak relationship between the money received by individual institutions and their level of effort and performance.

Annual funding – with frequent “captivations” to balance public accounts and lengthy periods within the year during which institutions are not permitted to commit public funds allocated to them – is harmful in the short-run to sound and efficient institutional management, and in the long run, to the development of institutional strategy and close collaboration with commercial and community partners.

Multi-annual, transparent and performance-based funding plans have been adopted in law, but not fully implemented. Or, they have been proposed, but not adopted. Three basic obstacles have hampered improvements to core institutional funding.

• MCTES does not have highly developed performance monitoring capabilities and funding expertise, and thus it is not fully equipped to manage a funding process that includes (past) performance components or forward-looking and profile-oriented performance agreements.

• Changes to funding methodologies used by governments are typically implemented, in part, through the addition of new resources, not purely through the redistribution of resources among higher education institutions according to a new set of rules, since this latter path creates clear ‘losers’ and precipitates more conflict than can be managed. Portugal’s fiscal crisis and subsequent public austerity have left it with little capacity to dedicate the new resources that would be needed for the reform of higher education funding.

• Multi-annual budgets cannot be achieved by the efforts of education ministries alone. Rather, they require a whole of government commitments, typically in the form of a binding agreement between government and the higher education sector, which Portugal has been unable to establish.

Recommendation on reforming public funding of HEIs

4.3. Reform public funding for higher education institutions, strengthening transparency and providing incentives for good performance.

Ensure a properly balanced institutional funding regime. The regime should (a) predictably funds the core activities of institutions, (b) reward institutions for performance in a way that is recognised to be fair, and (c) provide incentives for the development of forward-looking institutional profile. Portuguese authorities should aim for the development of a funding methodology that allocates approximately 80%-15%-5% of institution resources across these three funding pillars (activity; outputs; and future profile).

Funding to support core activities (80%) and performance (15%) could be delivered based upon agreed models that contain methodologies common to institutions within a sector. Funding to support institutional profiling (5%) could be based upon a multi-year performance agreement between the higher education institution and the Ministry of Science, Technology, and Higher Education.

Institutional profiles would necessarily vary, focusing in some cases principally on research and innovation, while in other cases on professional education and regional engagement. Profiles focused on research could be used, for example, to allow HEIs to better integrate R&D units into the institution’s research strategy.

Each funding stream would, preferably, be based upon a multi-year agreement that is agreed between Ministry of Science, Technology, and Higher Education and the nation’s public higher education institutions.

In order of sequence Portugal should introduce:

a. A profiling instrument providing funds to: a) set up profile and plan and b) report on annual progress on plan implementation, with 5% funding conditional on progress assessed on a multi-year basis. An MCTES‑convened panel could review initial profiling agreements with international experts drawn from systems that have experience of well-functioning profiling instruments, such as Finland. International experience demonstrates that Ministries can adopt a profiling funding stream even on fixed funding levels, since it results in the near term in a modest redistribution of funding levels.

b. Performance-related funding based upon a formula that reflects a combination of agreed outputs appropriate to all institutions, and other output indicators calibrated to the sector. Examples of the former include number of graduates, while the former would reflect, for example, PhD job placement for institutions with a focus on doctoral education, and work-based learning placements for professionally oriented institutions. MCTES can implement performance-related funding by channelling annual, incremental growth into this funding pillar.

c. Activity-related institutional funding (e.g. enrolments by field of study) is needed to create fairness and transparency and provide stability. This aspect, while fundamental, should be the last feature of funding reform implemented, and adopted when non-incremental new funds are available to limit disruptive redistribution of budget shares among institutions.

Policy issue 4.4. Funding and steering policies do not encourage institutional profiling and division of labour

The Portuguese government does not require public higher education institutions in Portugal to identify areas of strength and weakness, to link those to the distinctive regional, national, and international engagements they wish to pursue, and to reallocate resources that permit them to build upon areas of strength in service of their external engagements. The funding, regulatory, and steering arrangements with which higher education institutions operate provide few incentives for specialisation or improvements in performance.

Higher education institutions are not required to develop profiles within a clear national policy framework, nor is there a mechanism to help co-ordinate profiling between institutions to ensure the system as a whole delivers what Portugal needs. In 2007 the OECD proposed a higher education co-ordination body (CCES) that would be responsible for developing strategic goals and priorities for the university and polytechnic sectors; a higher education planning framework flowing from these strategic goals and its subsequent monitoring and adjustment on an annual basis; and a broad set of objectives based on this higher education planning framework to provide the basis for the ministry’s negotiation of performance agreements with individual institutions. These needs remain in the nation’s higher education system.

Government provides institutional core funding in support of public higher education and infrastructure on a historical basis, without taking into account directly the specific missions and potentially differentiated needs and objectives of different institutions. There are no ongoing funding streams provided by MCTES to public higher education institutions that encourage institutions to engage in profiling their institution.

The delivery of research funding for PhD study by FCT has also limited the development of institutional responsibility and profiling among public higher education institutions. Public funding for PhD study and, historically, post-docs is principally allocated by the FCT to individual applicants proposed by programmes, rather than to institutions whose graduate profile is co-ordinated by, for example, a Vice-Rector or Dean of Graduate Studies. The direct line of national funding to research groups (including both the multi-year research ‘core’ and individual ‘project’ funding) – and the absence or weakness of institutional governance with respect to research and graduates studies – prevents higher education institutions from setting an institutional research strategy that is aligned to their institutional profile.

The weakness of institutional profiling and development strategies in Portugal has a number of consequences for the performance of the higher education, research and innovation system as a whole. Teaching, research and innovation activities in individual departments and institutions are largely planned and implemented in isolation, without reference to the goals of the institution as a whole, to the activities of other institutions in the system and broader national development goals. The lack of strategic steering can also lead to inefficient duplication, missed opportunities for collaboration and a weak alignment of activities on the ground with the needs of particular localities, population groups or the nation as a whole.

The absence of clear profiles and strategies for each institution makes the system as a whole less readable or transparent, particularly for students looking to choose an institution and institutions looking to differentiate themselves from – or collaborate with – peer institutions in other locations. Additionally, with respect to the research missions of higher education institutions, the absence of targeted policies supporting institutional profiling has led to a higher education system in which research capacities are not strategically concentrated.

Recommendations to strengthen the HEIs in making responsible use of autonomy within a framework of national priorities

4.4. Strengthen the capacity of higher education institutions to make effective use of expanded autonomy and responsibility.

If higher education institutions are to be provided wider autonomy and responsibility, they must have the capacity to effectively put them to use. There are two ways in which institutional capacity can be strengthened.

First, the capabilities of professional and administrative staff in higher education institutions can be augmented. Government should consider providing financial support for the training of professional managerial staff through higher education and management training programmes and opportunities for staff to participate in secondments to key partner institutions with robust management systems in, e.g., the United Kingdom, Switzerland, and North America.

Second, steering and funding policies should be evaluated – and revised – to ensure that they support institutional responsibility, rather than diminish it. For example: MCTES should revise FCT research funding policies so they support the capacity of institutional leaders to set and implement a co-ordinated research profile. While applications for research funding – whether for individual projects, R&D Centres, or Associated Lab status – should be evaluated on their scientific merit, proposals should also be evaluated with a second criterion: their alignment to the institution’s vision of its distinctive profile as a research organisation. When funds are awarded to research organisations within the higher education institution, whether Associated Labs or R&D units, a share should be set aside at an institutional level – and matched by local resources – to support the development and implementation of an agreed institutional profile.

4.5. Strengthen the CCHE

Strengthen the CCHE, along the lines of the OECD’s recommendations of 2007, so that it can function effectively in bringing sector priorities to national debates and priority-setting for science, technology and higher education, and provide a stable framework of national priorities against which higher education institutions can expected to develop institutional strategies. This strengthening should include the addition of a budget for research and analysis, and a professional staff adequate to its expanded mission.

1.5. Higher education provision, access and support mechanisms

An adequate supply of individuals qualified at tertiary level is widely recognised as a key factor in enabling economies to shift towards higher levels of knowledge intensity and allowing industries to move up the global value chain. Internationally, increases in tertiary graduate rates have typically gone hand in hand with improved adoption and absorption of technological and process innovations, advances in productivity and the wealth creation associated with this. These developments are driven by the advanced subject knowledge students acquire through tertiary education and the wider transversal skills sets they develop through pursuing their education to a higher level.

Despite years of growth in tertiary education participation in Portugal, tertiary education attainment rates remain below the OECD average and below EU and national targets for 2020 and 2030. In this context, the Portuguese system needs to further widen access to tertiary education, while also ensuring as many students as possible successfully complete their studies.

Effective higher education systems, with high levels of participation and completion, support and encourage diversity and flexibility in the provision of study programmes, while also ensuring their quality. Greater institutional and programmatic differentiation ensures that institutional profiles and activities respond to the varied needs and interests of their student population, and society, and support the development of a broad range of skilled individuals.

Policy issue 5.1. Differentiation and flexibility in modes of provision and pedagogical approaches remains limited, jeopardising Portugal’s attainment goals

Notwithstanding Portugal’s binary system and recent efforts to create greater diversity, the higher education system still does not provide sufficiently flexible and innovative programme provision, structure and curriculum, most especially for non-traditional student populations. Higher education programmes, including across polytechnics, often remain theoretical in focus, with limited co-operation with the outside world and a lack of attention to developing key competences students needed for the modern economy. Programmes often have rigid structures and are oriented to specific professions, providing students with limited flexibility in combining courses. Traditional teacher-centred methods with a large number of lecture-based contact hours still prevail. In particular, modes of provision are not aligned to the needs and interests of a more diverse student population. Flexible, part-time, evening and distance learning options are more limited than in many OECD countries, and opportunities to study on an accelerated or an extended basis are not widespread.

While acknowledging the current quality assurance system’s accomplishments, the current quality assurance system also deters the introduction of more flexible, innovative, student-focused and competency-based programmes. As the system is moving towards a lighter touch model of quality assurance, based upon institution-level review, this could be an opportunity to shift from a rather prescriptive approach to one that encourages greater diversification and innovation in the development of new types of programme, instruction methods, curriculum and delivery modes.

Recommendation for improving flexibility in modes of provision and pedagogical methods

5.1. Further improve the diversity of the educational offer

Remove obstacles in quality assurance and funding systems that limit the capacity of higher education institutions to offer part-time, distance and blended short cycle, bachelor and master’s programmes, and ensure that provision is adapted to a full range of students, including adult learners. Provisions in the guidelines that underpin A3ES decisions relating to quality assurance of programmes and unnecessarily limit flexible programme design and curriculum should be reviewed and eliminated.

Policy issue 5.2. Pathways from secondary to higher education limit further widening and social diversification of higher education access

Portugal has a centralised admission process to tertiary education known as the General Access Regime (Regime Geral de Acesso, RGA) which provides students with a transparent mechanism for admission and has also reduced the costs of students in applying to individual institutions, and the burden for institutions to manage applications. However, the RGA’s national entrance competition, the Concurso Nacional, is based on the secondary leaving examinations that are aligned to the curriculum of generalist (scientific-humanistic) upper secondary education. The design of the national competition – combined with the rapid expansion of secondary professional education, which now comprise about 44 percent of upper secondary students – has resulted in tertiary entry examination regime that is no longer aligned to the contemporary profile of upper secondary education, or to the nation’s attainment goals.

Students who are outside the scientific-humanistic track in secondary schools are required to take an examination in subjects which are not part of the curriculum they have followed, putting them at a disadvantage to enter higher education. About 8 in 10 students (79%) completing the scientific-humanistic track entered higher education one year after completing their studies, while 16% of those completing secondary professional track continued directly to higher education – 6% enrolled in a bachelor programme and another 10% enrolled in a Higher Professional Education (Cursos Técnicos Superiores Profissionais - CTeSP) programme.

Portuguese education authorities recognise that the current entry regime for tertiary education now hampers wider access to tertiary education, and have organised consultation processes to identify policy responses.

Recommendation to widen access to higher education

5.2. Revise the higher education entrance examination system to ensure it is appropriately adapted to students from upper secondary vocational education.

To widen access to higher education, the entrance examination system for higher education should be aligned to the needs and profiles of students from both secondary professional and scientific-humanistic tracks. Following the option identified by the Working Group on the Assessment of Access to Higher Education (Grupo De Trabalho Para A Avaliação Do Acesso Ao Ensino Superior) in 2016, we recommend the addition of skills-focused examinations that reflect key aspects of the secondary professional curriculum to ensure that the knowledge and skills of students from vocational streams are properly recognised. Specifically, secondary school leaving and higher education access exams (Exames finais nacionais do ensino secundário e acesso ao ensino superior) should be designed to include additional modules that are aligned to the curriculum of the vocational stream. These should be accessible in principle to all upper secondary students, and be used to govern access to relevant programmes in polytechnics and universities. Vocational modules should be developed through co-operation between higher education and upper secondary educators. This will be essential to ensure take-up of the reform by students and higher education institutions, and the proper alignment of examinations to both the secondary curriculum and higher education programmes. It is crucial that new access routes be carefully developed and implemented with the wide engagement of HEI stakeholders.

In parallel, the Ministry of Education should ensure that the growing share of secondary professional students who continue to higher education are adequately prepared for success in their programmes, using feedback reports to equip teachers, school leaders, and families with evidence about the post-schooling trajectories of upper secondary professional students.

Policy issue 5.3. Financial and academic support for students

Portugal offers need-based grant assistance to about one in five higher education students, with modest additional support through public lending and specially targeted support. Nonetheless, some basic design features of the student support system are not fit for purpose, particularly for the government’s target audience: young adults who completed a secondary education and directly entered the labour market, or who began but did not complete a higher education degree. For example, the low threshold of eligibility for social scholarships means that a working adult who earns a (fulltime, full-year) minimum wage has a household per capita income in excess of social support eligibility.

Portuguese higher education students are provided quite limited access to academic support and guidance services. Higher education institutions serving students at high risk of attrition have not yet developed institutional capabilities to systematically track, contact, and support students who experience academic difficulties. Portugal has taken steps in recent years to develop an integrated student-level education data system that collects and disseminates data on the higher education sector, including indicators on enrolment, completion and labour market outcomes. This work needs to be completed to ensure that students have information about the risks and benefits of higher education when making choices about what and where to study.

Recommendations for ensuring adequate financial and academic support

5.3. Improve student financial support policies

The current system of social scholarships should be subject to a rigorous review of its effectiveness in permitting all who might benefit from higher education to study.

The +Superior grant programme should be reviewed. If the programme cannot be designed so that grants are awarded prior to enrolment decisions – and therefore only subsidising enrolment decisions that have already been taken, then the programme should be discontinued, and those resources re-invested in other student support programmes.

Financial support policies for students should be adapted to the needs of working adults. For example, the aid eligibility methodology for social scholarships could adopt an income protection allowance for working adults. This allowance would permit those whose incomes are near the minimum wage to have some part of their earned income exempt from household per capita income calculations used to determine scholarship eligibility.

5.4. Adequately support students making the transition to higher education

Special attention should be given to ensuring that students are well-prepared and supported to complete higher education. Specific additional measures could include incentives (through performance agreements or other appropriate means) for higher education institutions and their staff to develop systematic co‑operation and short-term staff exchanges or shadowing opportunities with upper secondary schools to help smooth and support transition to higher education. Co-operation and exchanges are potentially useful to raise awareness among students in secondary schools concerning the focus and challenges of higher education, so they can better prepare themselves. Moreover, they identify and increase understanding among teachers in both sectors of the biggest ‘gaps’ between what secondary education equips students to do and what higher education teachers expect them to do.

Additionally, developing and implementing systems at the higher education institutional level to monitor students’ performance and to signal difficulties would be an effective way to support early intervention and promote student success. Information on students’ academic performance (including particular deficiencies and gaps) could also be provided to upper secondary institutions through feedback reports, for example, to help review and recalibrate schools’ curriculum and teaching practices.

5.5. Encourage higher education institutions to offer more extensive academic and social support to students, in particular for students from disadvantaged backgrounds and mature students

To improve student success and to encourage adults to return to education, higher education institutions that offer well-designed social and academic support to students, such as career guidance, remedial courses, tutoring or psychological counselling, should be rewarded through performance-based funding. The institutional support practices eligible for funding should be evidence-based, and well-adapted to the profile of students served by the HEI.

5.6. Provide targeted support to encourage pedagogical training and reward good teaching performance.

Portugal should encourage and support pedagogical training for academic staff, targeting both new and established staff members and reflecting the diversity of requirements across student groups and institutions and increasing flexibility of the educational offer. Although some countries (such as the UK) have developed national academies focused on pedagogical development, others (including the Netherlands) have provided public funding to pedagogical capacity building initiatives organised by individual or groups of HEIs. Such an initiative could initially be supported in Portugal through pilot projects in selected HEIs. Additionally, the Portuguese government should explore ways to encourage institutions to include teaching performance as a key element in transparent, institution-wide systems of evaluation and promotion.

It is important for Portugal to include improvement of learning and teaching as a core objective in its national strategy for higher education and in institutional agreements to raise the profile of the issues at stake and incentivise action at institutional level. Key objectives should be increasing uptake of effective pedagogical approaches for skills development (problem-based learning, flipped classroom, use of technology etc.) and greater co-operation with employers and outside actors.

1.6. Doctoral training

Across the OECD, tertiary education institutions play a key role in training high-level subject specialists and researchers through doctoral degrees (PhDs). In Portugal, as in a number of other OECD countries, only higher education institutions officially recognised as ‘universities’ currently have the right to award PhDs, reflecting the traditional concentration of research in this type of institution. As elsewhere, a majority of doctoral graduates in Portugal have historically gone on to work in teaching and research roles in universities or, to a lesser extent, public research.

Despite the potential contribution of PhD holders to innovation and productivity growth within and outside the academic sector, questions remain in all OECD countries about the overall level of demand for PhD graduates and the best way to design doctoral training and related public support mechanisms.

Policy issue 6.1. The funding and delivery of doctoral training is not well configured to prepare doctoral graduates for today’s research roles

From a low base, Portugal has succeeded in greatly expanding its capacity to train doctoral candidates in the last two decades. It would be hazardous to make any general claims about how many doctoral graduates a country ‘needs’ or should aim to train. This will depend, in particular, on how the purpose of doctoral training is conceived. For example, is it about training specialists with knowledge that they can apply in the short-term to boost innovation in businesses and organisations, or about pushing the boundaries of knowledge in a wide range of fields in the long-term?

It is important to consider how many, in what fields and in what ways doctoral candidates are trained in Portugal for at least three reasons. First, despite the crisis, Portugal is spending an increasing amount of public money on supporting doctoral training. Is this money being directed where it should be and being well spent? Second, most analysts agree that the developing knowledge economy will call for more high-level specialists, analysts and researchers. Is the way Portugal organises and supports doctoral training able to respond to specific and changing skills needs? Third, an increasing number of PhD graduates, combined with limited opportunities for permanent academic careers (see below), means doctoral graduates increasingly need skills and experience they can apply in non-academic settings. How well is doctoral training in Portugal performing in this respect?

Portugal has a diversified system of doctoral training, with PhD programmes in a wide range of institutions and a broad spectrum of scientific areas. However, the graduation patterns for doctoral graduates in Portugal largely reflect the historical, demand-driven allocation of PhD scholarships by the FCT, rather than any clear and deliberate prioritisation of fields or sub-fields or a systematic assessment of the relevance of individual research projects to the development of institutional profiles and national research priorities. While it is important to retain capacity to fund PhD training across subject fields and protect basic research, there is scope to use public PhD funding more actively to strengthen research capacity in fields identified as priorities for institutional and national development.

At the level of training provision, doctoral programmes in Portugal vary considerably in scale. Many doctoral programmes are – nominally at least – operated in partnerships between research units in different universities, external laboratories or, in some cases, companies, which increases the potential for scale, shared training and interaction between candidates. However, the very large number of doctoral programmes offered in Portugal means the number of candidates in some programmes is very low, making it hard to provide quality cohort training and to build active research communities with the critical mass to achieve excellence.

Broader concerns include the considerable instability and unpredictability in the flow of public resources for doctoral training – in volume and the type of instruments used to allocate funding – and the concentration of public funding and decision-making responsibility in the FCT. The instability in the volume of funding has created difficulties for prospective students and institutions, with success rates for applications falling considerably over time. The changes in funding instruments (doctoral programmes vs centralised calls) appear to reflect concerns on the part of government and the FCT about how much discretion should be devolved to universities in attributing funds. Experience from other OECD countries suggests that Portugal is not alone in facing this question, but that most governments have opted to devolve greater discretion to institutions, even when Research Councils maintain national competitions for individual scholarships.

Recommendations on aligning PhD capacity and needs

6.1. Ensure closer alignment between allocation of PhD funding and national research priorities and skills development needs

Portugal has hitherto awarded funding for PhD training based on an assessment of the scientific excellence of applications for individual scholarships or doctoral programmes, with funding allocation between scientific fields based on historical allocations and an aspiration for balance between disciplines. Although it is important to maintain some demand-driven public support for doctoral research across fields, the current system limits the scope for the FCT to direct funding to develop Portugal’s high-level skills in priority areas. Funding PhDs in areas where there is little demand for graduates is not only a poor use of public money, but encourages individuals to pursue a training and career path that diverts them from more productive options and may ultimately lead to frustration and disappointment.

It is challenging to predict the number of PhD graduates Portugal requires each year to develop research capacity further and meet the requirements of the country’s science base and economy. Given available evidence on the employment outcomes of PhD graduates from Portugal, the number of graduates per capita in international comparison and the level of public funds available, it appears reasonable to continue to maintain the number of publicly funded PhD fellowships at around the current level (i.e. around 1 500 a year). There is no compelling evidence that would justify an increase in the number of grants beyond this, particularly in light of the overall constraints on public spending.

Within this overall level of public support, Portugal should ensure PhD funding is reserved for the ‘brightest and the best’ and target its public support for doctoral training more rigorously on fields of knowledge that have been identified as national priorities. Prioritisation of some fields will inevitably mean other fields are deprioritised. As part of a wider reform of FCT funding for PhD training (see also next recommendation), the FCT should reserve a greater proportion of its training budget for PhDs in fields which the country has identified as specific priorities or where there is an identified need to develop high-level specialists. This prioritisation should be identified in the national strategic frameworks discussed above. Priority fields could be promoted either through dedicated priorities in centralised calls for individual scholarships, or dedicated resources for doctoral programmes in priority fields (the UK’s Centres for Doctoral Training (CDT) could be a useful reference model in this respect).

6.2. Direct more public funding for PhDs to higher education institutions through reformed support for doctoral programmes

Decision-making responsibility for selecting PhD candidates for public funding has historically been concentrated in the FCT. This leads to a situation where the FCT has prime responsibility for ‘picking winners’ by selecting the individuals best suited to pursue a doctoral degree. Other OECD countries tend to distribute responsibility for selecting doctoral candidates for funding more widely, notably by giving individual doctoral schools and departments freedom to select candidates for some or all publicly funding doctoral training places.

Portugal has experimented with providing funding to institutions through contracts for doctoral programmes, with selection of candidates devolved to institutions. This model appears to have been effective in creating innovative doctoral partnerships in areas of strategic importance to the country. Hitherto, however, these doctoral programmes have not used to support wider institutional strategies and strengthen differentiated institutional research profiles. Moreover, the calls for doctoral programmes in 2012 and 2013 almost certainly supported too many programmes, with too few students in each programme to achieve the real benefits of cohort training.

As part of the wider reform of support for doctoral training, the FCT should allocate at least half of the resources it has available to institutions to operate doctoral programmes. Funded programmes should have certain shared characteristics:

a. They involve partnerships between universities (and potentially polytechnics) and relevant research centres with developed profiles in the fields in question, allowing expertise to be pooled and critical mass to be created.

b. They have an annual entry cohort of at least 10 doctoral students (with exceptions allowed for specific niche fields where this would be unrealistic) to allow efficient delivery of common training elements and cohort benefits for candidates to be realised.

c. They include a set of relevant common training components, including a focus on transferable skills sets relevant to careers outside academia.

d. They have in place well-developed mechanisms to provide mentoring and career guidance to doctoral candidates.

Devolution of responsibility to institutions for selecting candidates for PhD funding should be accompanied by strengthened mechanisms of external quality control to ensure high standards are delivered in practice. As part of the new system of institutional accreditation, A3ES should require all higher institutions wishing to offer PhD programmes to demonstrate that they meet high quality standards for doctoral training. The standards to guide this aspect of accreditation should be devised by A3ES in consultation with FCT and institutions. The standards should accommodate different forms of doctoral training to promote diversity of provision and take into account factors including:

a. the alignment of the doctoral programme to the institution’s institutional profile

b. the extent to which staff running the programme are performing with success as researchers/innovation partners, as evidenced by relevant publications, collaboration with business, etc.

c. opportunities for doctoral candidates to collaborate with researchers and research groups in other countries

d. past performance on rates of attrition and time to completion in existing or similar programmes in the institution

e. evidence of the employment outcomes of past doctoral graduates from the programmes / departments in question, including in the non-academic sector.

Policy issue 6.2. More needs to be done to create quality employment opportunities for doctoral graduates in Portugal

The results of the 2015 survey on the Careers of Doctoral Holders (CDH) in Portugal show that the recent doctoral graduates are far less likely to work in the academic sector than those who graduated in previous years, with increasing numbers working in the wider public or private sectors. Graduates wishing to work in the academic sector have often only been able to access precarious, grant-based post-doctoral positions, rather than regular academic posts. The government is in the process of creating additional contractual positions for post-docs (ending the previous grants-based system). However, notwithstanding this development and a likely increase in recruitment by universities, polytechnics and research centres as funding levels are increased, the academic sector will only ever be able to absorb a small proportion of those graduating with doctorates each year.

PhD graduates in Portugal have found it relatively difficult to find relevant employment in the private sector and public sector outside higher education and research. This situation is primarily a reflection of the structure of the Portuguese economy, which is dominated by micro enterprises and specialised in low and medium-technology sectors. Discussions with stakeholders also suggest it reflects a tradition of limited co-operation between academic research and productive sectors and public services, which means that many business leaders are unaware or unconvinced of the need for highly qualified research staff. Poor management skills and limited awareness of opportunities for innovation and productivity gains in the Portuguese business sector are a key issue highlighted in the most recent OECD Economic Survey of Portugal.

As discussed above, there is, in many cases, limited direct alignment between the thematic focus of PhDs and possible applications of this knowledge, and associated skills acquired by PhD holders, in the wider economy. Although, any strategic prioritisation of thematic areas for doctoral training must adequately safeguard study fields without direct links to the economy (a core aspect of basic research), there is clearly scope to increase the focus on PhD training with direct application in the wider economy.

Data on inward migration in selected countries in Northern Europe, as well as anecdotal evidence from stakeholders in Portugal, suggest that significant numbers of highly qualified Portuguese graduates leave the country to work in the private sector and academia elsewhere in the world. Although the current economic recovery in Portugal is likely to increase employment opportunities in the country, the risks associated with ‘brain drain’ should not be ignored in planning research and innovation policy. Improving the availability and attractiveness of career opportunities in Portugal in the academic and private sectors must be a core element in any national response to brain drain. In addition, however, the domestic absorptive capacity for doctoral graduates should be taken into account to a greater extent in determining the numbers of PhD places to fund.

Recommendations on developing employment opportunities for doctoral graduates

6.3. Develop tailored selection and quality criteria for doctoral training programmes in the business or wider public sectors

Through its support to individual PhD candidates and doctoral programmes, the FCT should seek to increase the number of doctoral candidates undertaking their PhD in a business or other non-academic setting. The selection criteria and general requirements for FCT-supported doctorates appear not to be adequately tailored to the needs to PhDs that are not based in universities and research centres. As such, the FCT should review the relevant selection criteria and conditions in consultation with representatives of businesses and public sector organisations that would be susceptible to hosting PhD candidates. The CASE scholarships used by UK Research Councils could be a useful reference point.

Given the composition of the Portuguese economy and the limited number of businesses likely to be able to host PhD candidates in the short to medium-term, it is also important that adequate opportunities are given to undertake PhDs in public sector organisations (hospitals, public service organisations and ministries) which potentially have considerable capacity to provide appropriate environments for PhDs researchers.

6.4. Maintain and expand the practice of supporting ‘mixed’ PhD scholarships

The Review Team considers that the model of ‘mixed’ PhD scholarships, whereby the doctoral candidate spends part of their PhD training period abroad is an example of good practice that should be maintained and strengthened. Mixed PhDs provide individuals the opportunity to gain valuable international experience and exposure to expertise and experience that are not necessarily available in Portugal. As such, the ‘mixed’ model should be retained in the reformed system of FCT support, both for individual scholarships and scholarships awarded through doctoral programmes.

6.5. Improve data collection about the career paths of doctoral candidates and graduates, including those who move abroad.

The quality of date available on the academic career paths and subsequent professional development of doctoral candidates and graduates is inadequate to support effective policy making by government and strategy setting by higher education institutions. Improved information is also of vital importance to career guidance services and those considering embarking on a doctoral degree. The absence of information on out-migration by doctoral graduates from Portugal is particularly problematic.

As a first step, the Portuguese authorities should require any doctoral candidate supported by the FCT to provide regular updates on their careers as a condition of funding. A suitably simple questionnaire system, respecting relevant privacy legislation, should be developed. The system could be open to students and graduates not supported by the FCT on a voluntary basis. Data collected should be used to undertake regular assessment of the results and impact of FCT funding for doctoral training.

1.7. Academic Careers

The core academic workforce in Portugal is composed of professors, lecturers and researchers working in the country’s public and private tertiary education institutions and publicly funded research units. Academics and other staff categories in public institutions have historically been – and in most cases remain – civil servants (funcionários públicos), with contracts aligned to the legislation covering employment in the public sector more generally. Public institutions that have moved to foundation status (see above) can appoint academic and other staff using private law contracts, governed by the general Portuguese Labour Code that applies to employees in the private sector. Staff in private institutions are employed exclusively under private law.

Academic staff in all sectors are appointed to permanent contracts through public competitions. In practice, alongside permanent teaching staff and researchers (docentes or investigadores de carreira), academic staff can also be hired at any of the three core academic grades on fixed term contracts, usually on a part-time basis. In addition to the core academic grades, a large number of individuals are employed across all sectors on a fixed-term, part-time basis as junior lecturers (assistentes). A further distinction is made between academic staff who work exclusively for their institution – a status called ‘exclusive dedication’ – and those who also take on other work alongside their academic position (such as private consulting or work in a second institution), even when this is nominally a ‘full-time’ position. Staff numbers and the distribution of posts between staff categories have remained broadly stable over the last five years in public universities, but staff numbers have fallen in public polytechnics and private universities and polytechnics, primarily as a result of reductions in assistente posts.

Policy issue 7.1. Career planning and entry: queuing and in-breeding

Access to academic careers in Portugal has become increasingly difficult in recent years. This is the result of an increasing supply of potentially qualified candidates for academic positions and falling demand for new academic staff from the higher education and public research sector. One potentially desirable consequence of the increased flow of new doctorate holders and falling demand in the academic sector is an increasing tendency for doctoral graduates to seek and find productive work in other sectors of the economy. However, a more problematic consequence has been the increase in the number of doctoral graduates in precarious post-doctoral positions, without formal employment contracts and with limited perspectives of obtaining a permanent academic post in the longer term.

Entry to academic and research careers in Portugal is already marked by a high degree endogamy or ‘in-breeding’. Institutions have a strong tendency to recruit their own doctoral graduates and staff may go on to pursue their entire career within the same institution. Evidence from Portugal and elsewhere shows that “inbred” scholars produce less research and research of lower quality than do those who have been trained outside the institution in which they make their career. Moreover, inbreeding is widely thought to encourage traditionalism, and to endanger excellence and innovation.

A new initiative to promote scientific employment launched by the government in 2016 has the stated aim of creating more and more stable research posts in the academic sector and, in so doing, helping to address the precarious situation of post-doctoral fellows in Portugal. However, by creating a type of temporary contract, the new system risks perpetuating unrealistic expectations about the chances of obtaining a permanent academic post and diverting individuals from exploring job options and opportunities in other sectors. For the institutions, the transitional regime proposed risks tying (future) resources to existing areas of post-doctoral research activity and restricting opportunities to refocus activities in line with renewed institutional profiles and institutional and national development strategies.

Recommendations on strengthening career planning and entry

7. 1. Improve information and guidance to prospective academic staff

Portugal needs to ensure talented people are able to make the best use of their knowledge and skills for the good of the country. Ensuring the brightest and best are attracted to careers in academia and public research is an important part of this. However, in the current system in Portugal – as in other OECD countries – too many young (and less young) doctoral graduates seek to embark on an academic career with unrealistic expectations about the probability of ultimately securing an academic post. This can lead to a sub-optimal use of talent, as individuals devote time and energy to pursuing unrealistic goals, when they could be otherwise engaged in rewarding jobs with stronger long-term career prospects. The higher education sector as a whole has a responsibility to be more transparent about the likely flow of job opportunities and the purpose of post-doctoral positions.

Appropriate public authorities, including the FCT, along with higher education institutions, should develop guidance and information campaigns to ensure those considering an academic career are well informed, including:

• Making clear that post-doctoral positions are only appropriate for those seeking to pursue an advanced research career, and should not be viewed as the default step for those completing doctoral training.

• Publishing transparent information about likely recruitment of staff into entry-level academic positions (professor auxiliar, professor adjunto, investigador auxiliar) by providing project recruitment plans for the next five years, which are updated annually.

7.2. Ensure that post-doctoral positions (Investigador júnior) allow post-docs to gain skills and experience that can be exploited outside academia

Recognising that entry to permanent academic posts will – and must – remain highly competitive, those who do embark on a period as a post-doc under the new system of post-doctoral support in Portugal must be supported to develop experience and skills which they can also use to obtain and thrive in work outside the academic sector in Portugal. As a condition for receiving direct or indirect funding from the state (primarily directed through the FCT), post-docs and their host institutions should be required to jointly produce a career and skills development plan setting out specific measures the post-doc will take to develop their wider skills sets and how the institution will support the post-doc in skills development and career planning. All post-docs should have access to a mentor, who is different from their direct supervisor, who can support them in career planning.

7.3 Adapt FCT funding rules to counter inbreeding

In order to promote greater mobility of students and junior researchers between Portugal’s higher education institutions and research centres, the FCT should make mobility a condition of the award of a majority of its funding for doctoral training and junior researcher (post-doc) positions. To receive FCT funding doctoral candidates should be required to train in a different institution to the one where they completed their previous education. Junior researchers should be required to work in institutions other than the one that awarded their PhD. Exceptions to this general rule may be permitted where research topics are so specific that relevant training or junior research opportunities are available in only a single institution in Portugal. However, care must be taken to limit such exceptions and maintain the general principle that trainee researchers and junior researchers should move institution.

7.4. Ensure fixed-term and permanent employment positions created through the new initiative for scientific employment support institutional profiling and development strategies.

The new system to support scientific employment must be used to support the development of institutional profiles as recommended above. The best available candidates need to be employed in research and teaching activities that help the institution develop its areas of strength and build its profile. The objective of creating more permanent research posts is commendable and consistent with recommendations made in other research systems. However, it is imperative that the new system does not lead to poor quality candidates being employed on permanent contracts in fields which contribute little to institutional development and the needs of Portuguese society more generally. To avoid this, the Portuguese authorities should:

• Ensure that alignment with institutional profiling and national development goals is a criterion in the selection of new post-docs and other research posts created through the initiative on scientific employment.

• Encourage applications to posts from individuals based or educated in institutions other than the host institution for the post.

• Allow institutions the maximum degree of flexibility in creating permanent academic posts after the subsidised fixed-term contract periods have expired, notably through avoiding a narrow definition of the scientific area in which the new post should be created.

Policy issue 7.2. The structure of careers: weak differentiation and performance-based rewards

National legal and regulatory frameworks largely structure careers in public higher education institutions. As well as defining staff categories and selection requirements, the specific legislation dealing with careers for university and polytechnic teaching staff also specifies maximum and minimum ratios for particular grades and staff categories, imposes minimum and maximum teaching hours and contains general guidelines relating to staff evaluation, promotion and pay. Portugal also has the specificity of having a distinct legal basis to regulate ‘research careers’, even though university – and increasingly polytechnic – teachers (docentes) are expected to conduct research as well as teach. The comparatively detailed regulation of academic careers in law in Portugal creates rigidities in the system, in particular in relation to the way staff use their time and profile themselves.

Several factors have militated against the widespread implementation of effective performance evaluation and reward systems in Portuguese higher education institutions. As in other countries, the principle of academic autonomy and the absence of any tradition of performance evaluation for staff in higher education have made progress in this area slow. In addition, the rigid national pay scale applied in public institutions, with relative few pay steps in each grade and comparatively small pay differences between steps, and the absence of public money to fund individual pay rises in recent years have made it difficult to develop systems of performance evaluation that link performance with financial rewards.

Recommendations on ensuring greater differentiation in the career structure

7.5. Ensure institutions and academic staff have flexibility to allocate staff time efficiently and to follow different career profiles

The legal framework for academic careers should be modified, as necessary, to allow higher education institutions to set their own policies on the allocation of time among teaching, research and outreach obligations in response to short-term changes in opportunities and responsibilities. Further, HEI should create opportunities for staff to choose among differentiated career profiles for those who wish to adopt long-term changes to the balance of responsibilities they perform. Policymakers should use the new role of A3ES as an evaluator of higher education institutions as part of this process. Institutional review by A3ES should permit higher education institutions to demonstrate their fitness and capacity to take responsibility for workload and career profiles, and permit institutions to become self-regulating with respect to workload and career profile policies rather than subject to national regulation.

7.6. Encourage institutions to implement transparent and merit-based procedures for staff performance review that are aligned to institutional mission, and support differentiation in pay and rewards.

After transparent systems of performance review aligned to institutional mission are established, they should be used to support differentiation in compensation and other rewards. In the near term, these agreed evaluation systems should initially be used to support the allocation of benefits permissible under current law, such as performance bonuses, and temporary revisions to teaching obligations (within the national framework). In the longer run, performance evaluation plans should be used to support decisions about within-rank increases in compensation; limited adjustments to base compensation that may become available within a modified legislative framework; and to guide decisions for those who hold appointments under private law in foundation universities.

Policy issue 7.3. Career mobility and retirement: low mobility and late retirement

Those who hold career appointments in academia in Portugal tend not to move between institutions in the country. The combination of a national salary scale and low differentiation in career profiles across institutions reduces the incentives for academics to move institutions to obtain a role that better fits their desired profile or in order to gain a pay rise. The numerous available opportunities to conduct research outside one’s host institution through affiliation with an associated laboratory or R&D centre further reduce the incentives to move. As noted in the earlier discussion of in-breeding, limited mobility reduces the range of experience gained by individuals and the innovation and development benefits for institutions of bringing in ‘new blood’. Inbreeding and the comparatively static nature of academic careers in Portugal are also contributing factors in explaining the comparatively low level of internationalisation among academic staff in the country.

However, alongside the tendency for in-breeding, limited job opportunities in recent years, pay cuts and freezes and the wider structural problems affecting the organisation and performance of the system that are discussed in this report, have all combined to reduce the more general attractiveness of Portuguese higher education for international academics. Moreover, older staff often remain in post beyond pensionable retirement age, limiting opportunities for younger staff members to advance into posts that are more senior.

Recommendation for ensuring greater career mobility

7.7. Promote near-term measures to increase inter-institutional mobility and timely retirement, while, in the long-term, adopting reforms that increase domestic and international mobility.

In the near term, promote inter-institutional mobility through short-term faculty exchange programmes and expanded opportunities for visiting appointments through funds allocated by FCT, and awarded by higher education institutions. Additionally, ensure that research staff retires at a fully pensionable age, in line with national legislation, to ensure senior positions are freed up. The reforms described above – with wider institutional responsibility to set workload, career profile, and compensation policies that are aligned to differentiated institutional profiles – will significantly increase domestic mobility by creating incentives for mobility that are presently absent. These reforms, in combination with the further development of private law employment in foundation universities, will make Portugal a significantly more attractive destination for researchers than it is at present.

1.8. High-skilled employment, co-operation with HEIs and innovation in the business sector

Business innovation is far from limited to science-based innovation. It encompasses a wide range of types of innovation, from the knowledge-intensive projects based on internal R&D and collaboration with academic research to rather informal and incremental innovation activities.

A key factor of success of innovation system depends therefore on the ability of governments, in close interactions with the research and innovation communities, to set up in a co-ordinated way a two-fold approach supporting business innovation from both sides of the supply and demand of knowledge:

• An ‘intensive margin’ approach aims to deepen the knowledge-intensity of medium high and high-tech industries and services.

• An ‘extensive margin’ approach aims to support the upgrading of the innovation capacity of each sector, including lower tech ones. Key for this process is the provision of systematic, hands on and stable support to business innovation.

Policy issue 8.1. The Portuguese innovation policy mix needs a careful balance between the support to high and low tech business firms

The economic success of many Portuguese firms has been achieved by incremental innovation and learning by doing rather than by science-based innovation.

As in many OECD countries, the support to science-industry collaborations and science-based start-ups ranks high in the research and innovation policy agenda. More should be done, including at the level of HEIs to provide the right set of incentives for greater engagement with industry at institutional and individual levels.

However, these initiatives, although essential, concern only a limited number of companies with the sufficient ‘absorption capacity’ to collaborate with academic institutions. The new CoLAB scheme for example is an important new development that could alleviate the problem of the lack of institutionalisation and long-term commitment of partners. It is however in practice limited to industrial partners that can afford multi-year financial commitments and have already built relationships with the academic institutions. Structured research-industry collaboration between industrial partners with little prior R&I experience and polytechnics, for example, might usefully complement the programme. Tapping into the potential of firms that do not yet significantly innovate and serve mainly regional markets is a major opportunity that has not been fully addressed.

Policy issue 8.2. There are emerging opportunities to support business innovation that merit well-designed policies

The Portuguese business sector has significantly enhanced its innovation capacity over the two last decades, in particular during the period preceding the outbreak of the 2008 crisis. Although the economic situation in years afterwards resulted in a decrease of business R&D expenditures, more recently there has been an increase in the participation of Portuguese firms in innovation support schemes. These trends include participation by companies newly engaged in innovation activities, a positive technological balance of payments, and a general recovery of investment in research and innovation.

Innovation input and, especially, output indicators (such as patents) have nonetheless remained at a low level compared to the OECD average, partly due to the dominance of SMEs and the weight of traditional sectors (textiles, food and beverage, ceramics/materials, paper/wood/furniture) in the economy. Although a few traditional industries (the shoe industry, but also textiles, clothing and moulding) have managed to quite successfully shift towards higher added-value products and services and increasing exports, large parts of the economy remains under-developed, producing non-innovative products for local markets.

Portugal has implemented a comprehensive portfolio of policies offering direct support for business innovation, largely co-financed by the Community Cohesion Policy. However, the project-based nature of Structural Fund investments and their emphasis on research excellence limit their capacity to build sustainable and regionally relevant innovation ecosystems aligned to longer-term specialisation priorities. Although hard to assert with certainty since only very few of these schemes have been assessed (beside some evaluations conducted at overall programme level in the framework of Structural Funds), the fact that the innovation support is often spread thin among a variety of business firms and intermediary organisations also probably limits their effectiveness.

Policy issue 8.3. Cluster-based approaches are instrumental to support innovation, including in less developed regions

Several examples in Portugal and elsewhere point to the importance of regional networks to support the upgrading of innovation capabilities of firms in low-tech industry and service sectors, even in remote areas.

The added value of some innovation support schemes, such as ANI’s mobilising projects, lies in the technical services they provide or in networking effects, rather or in addition to direct financial support. Also, as shown by one rare example of specific scheme evaluation, Structural Funds have positively supported the formation of competitiveness and technology poles and clusters.

In some countries, including the United Kingdom, the United States and several Latin American countries, specific institutions have been set up to provide various ‘innovation support services’ to SMEs, most often in a regional context. These services include technology transfer and diffusion services (support in the form of advice and counselling for technology transfer and uptake by SMEs) as well as innovation management and non-technological innovation services (innovation management advice, audits to identify needs, innovation coaching, design and support for marketing innovative products, etc.).

These initiatives can also have a positive effect to alleviate regional imbalance in innovation, a major concern for Portuguese authorities. However, there are important limitations to what research and innovation policies can, alone, achieve to counter the strong territorial concentration dynamics. Stronger and wider co-ordination between policy fields will be needed to address these issues and ensure that research and innovation policies contribute to alleviate economic and social development imbalances. Cluster policies have proved effective in several countries not only to support firms but also as policy co-ordination tools in a localised area.

Recommendation on providing resources to upgrade innovation capabilities

8.1. Establish regional innovation platforms to provide domestic SMEs easy access to critical resources – such as information, expertise, and equipment – for upgrading their innovation capabilities.

Efforts should be devoted to enhance the density of relationships in regions between domestic firms, higher education institutions (particularly polytechnics and regionally oriented universities), and the various intermediaries. This will require local and regional networks with a clearly acknowledged node offering a broad range of innovation services adapted to local needs.

The core of these networks could take the form of a permanent (rather than project-based) local platforms, i.e. ‘light’ co-ordination structures that gather on one site the competencies and offer of services of multiple partners (HEIs, Technology centres and various other intermediary organisations, consulting and engineering companies, individual experts, local administrations, etc.). Although not very formal (with a status of not-for-profit association for instance), it is essential that these platforms be resourced with some dedicated experienced staff and equipment (e.g. for metrology and testing) with the capacity to support the innovation activities of local companies. Different models exist, from the various types of regional innovation agencies (OECD, 2011) to technology-focused extension service organisations.

Emulating the best international practices, their activities should include not only specific hands-on support activities to individual (or groups of) SMEs (technical assistance and consulting, interface between experts, from academia and industry) but also public mission services (provision of information, awareness-raising, promotion of innovation, general capability building, etc.).

The public mission services provided by the platforms should be financed by the government on both the supply and demand sides:

• on the supply side, the platform needs permanent funding to set, operate and maintain the needed skills and equipment

• on the demand side, incentivise companies to use these services, for instance using ANI’s current R&TD Vouchers.

The twofold mission of regional innovation platforms

Public mission background work

Specific support to SMEs or groups of SMEs/joint projects

– Provision of information on opportunities for improvement in existing technologies, best practices, international trends, relevant regulations, business networks, opportunities to become government suppliers and other support to contractual arrangements – Awareness raising – General capability building – Stimulation and/or running of networks and clusters – Node for local/regional partnership – Promotion of internationalisation, promotion of foreign investors – Facilitator for sharing scientific and technical equipment – Maintenance of database of experts

– Benchmarking of companies in the industry at the national and international levels to gauge performance level – Technical assistance and consulting in the context of innovation/improvement projects designed individually for interested companies (including identification of needs) – Training of plant and administrative staff for the effective use of technologies more advanced than those previously used by the company – Provision of services to a group or network of companies with common needs and challenges that are not directly related to competition among them – Joint projects of companies and public and academic laboratories for solving specific problems associated with the companies’ products or processes – Advice on developing new strategies for the company and assistance in diagnosing and managing impending changes during implementation

Sources: Adapted from OECD (2011), “Maximising the impact of regional innovation agencies, http://dx.doi.org/10.1787/9789264097803-9-en; Rogers (2013), “Technology extension services”.

Their beneficiary targets should include SMEs with limited in-house innovation capabilities that rarely co-operate with academia, do not hire highly skilled staff and seldom use shared equipment. These companies generally do not innovate due to a lack of entrepreneurial culture, skills, and incentives, or their inability to identify innovation opportunities.

Several organisations deliver some of these activities, including polytechnics, technology centres (and other intermediary organisations), Clusters and Poles, and networks financed by ANI’s Mobilizing Projects. Building on the experience and resources of these organisations, the added value of the regional innovation platforms lies in their systematic approach and the wide range of services they would provide.

The precise composition and status of these platforms is beyond the scope of this Review. It should result from negotiations between national and regional authorities and the existing providers of some of these services.

Different options exist, including creating platforms within or in close connection with polytechnics, which could be the backbone of these platforms in each of their respective speciality. Several of the polytechnics the Review team visited have already engaged in significant collaborations with regional industries and services but these remain often on a limited scale. These institutions should be provided sufficient support and incentives to become acknowledged as key providers of research and innovation services in companies.

Policy issue 8.4. Mismatches between the supply and demand of qualified personnel may be hampering innovation

Portugal has improved the level of qualification of its population over the past decades (see Chapter 2). It now offers a fairly highly-qualified human resource base of graduates and PhD holders and lower labour costs than other Western Europe economies. However, there are some mismatches in graduate qualifications and industry needs. Specifically, there appears to be an overemphasis on academically-oriented PhDs relative to engineers or more professionally-oriented PhDs.

This originates in secondary education, where practice-oriented curricula are not held in the same high esteem as theoretically focused curricula. As consequence, practice-oriented higher education, e.g. at polytechnics, tends to be perceived as less attractive than academic education at universities.

Higher education and PhD training even in engineering disciplines do not consistently develop close links with industrial practice. Academic requirements seem difficult to reconcile with the need to prepare graduates for later employment outside of the public research system, and incentives for academics to intensify their collaborations are limited.

Recommendation on supporting efforts to strengthen local development

8.2. Continue upgrading polytechnics and regionally-profiled universities, supporting their capacity to further develop as ‘practice-based knowledge-intensive institutions’ dedicated to local development

Following a thorough review of their capabilities concerning linkages with industry partners, the most dynamic polytechnics and regionally profiled universities should be supported and incentivised to strengthen their profile in enhanced professional education. This profile would include short courses on emerging technologies, digitalisation, innovation management or other matters of primary relevance to industry, collaborative research and, more generally, the types of innovation support services needed in the regional innovation platforms. This would allow them to play a more extensive role in the provision of professional skills to support the upgrading of industry and services than they currently do.

The broadening of their range of missions and corresponding activities should be encouraged according to local needs, e.g. special forms of staff training geared towards the needs of clusters (on innovation, intellectual property (IP) management, digital transformation, internationalisation, etc.) and other support services to local companies. The type of public support they receive, currently focused on innovation projects in a rather narrow sense in the framework of the Structural Funds, should be adapted to this broadened portfolio of activities.

These HEIs could be incentivised to provide enhanced professional education through for instance institutional evaluation and performance contracts, in close connection with their research activities. Regarding Polytechnics specifically, the on-going specific FCT support to their research activities in collaboration with industry should be continued.

Policy issue 8.5. Further support for intermediary organisations in low tech industry and service sectors is needed

Cluster-based initiatives often develop around intermediary organisations, such as technology centres, or higher education institutions, particularly polytechnics and regionally profiled universities. The government has progressively created a diversified system of intermediary organisations (transfer offices, technology centres, S&T parks, incubators, poles and clusters) to fulfil a wide range of business knowledge transfer and service needs, from science-based to incremental and problem-solving innovations. Some of these intermediary organisations, in particular Technology Centres, have been in several cases instrumental in this upgrading process. They not only gradually provided the needed technologies and skills, but also promoted and supported collective actions among sometimes competing firms. This upgrading process came, however, at the price of significant job losses in these sectors, as exemplified by the shoe industry.

Most of these institutions operate with fragile business model in which systematic public support is absent. Some intermediary organisations received Structural Funds when they were launched, but have since received no basic funding. This has resulted in more consulting engineering and other commercial activities, and less “upstream” applied research and innovation collaborative activities. The 2017 Interface Programme provides some multi-annual basic funding, measures to support the hiring of PhDs by these organisations in collaborations with industry, and financial support for the acquisition of new equipment. This institutional funding, if stable over years and conditioned to regular evaluations, could have a significant effect on the upgrading of the domestic firms innovation capacity.

Policy issue 8.6. The Knowledge transfer infrastructure should be strengthened

Technology transfer offices and science and technology parks can help overcome the lack of absorptive capacity among traditional SMEs and bridge the gap been firms and academic institutions. This has been demonstrated by international experience, and by several Portuguese ‘start up’ success stories.

However, TTOs have often limited budgetary and human resource. Studies have shown that the performance of knowledge transfer organisations and services is positively linked to the size of the higher education institutions to which they are connected. The University Technology Enterprise Network (UTEN) is an interesting initiative in that regard as it brings together the most internationally oriented technology transfer offices to strengthen their commercialisation of domestic research activities via joint activities and exchange of good practices (including through training of Portuguese technology transfer officers by American specialists).

Some countries have gone further and experimented with new approaches to strengthen knowledge transfer institutions and reach critical mass and high quality of services, for instance via the creation of new models such as technology transfer alliances (TTAs) which bundle the resources and standardise the practices of some TTOs.

Recommendations on intermediary organisations to provide knowledge exchange and innovation services

8.3. Ensure that intermediary organisations have a sufficient level of guaranteed multi-annual funding to maintain and expand their networks, infrastructures and support services

Intermediary organisations (clusters, technology centres, applied research centres, etc.) fulfil various tasks to support innovation in firms and public organisations. Some of these tasks have the nature of public mission and should therefore be funded via stable state or EU funding (at a level of 20 to 30% of their turnover, as most of their counterparts with which they increasingly compete in Europe) in order to avoid significant drift toward more lucrative commercial activities (engineering consulting, etc.).

The government has recently announced the launch of the Interface Programme, which includes several support schemes (including a share of basic funding) for selected ‘labelled’ intermediary organisations. This programme should be implemented and maintained on a continuous basis for intermediary organisations that have successfully fulfilled the objectives announced in their development plans.

8.4. Support the sharing and pooling of resources among knowledge transfer organisations

The sharing and pooling (‘mutualisation’) of knowledge transfer services of different institutions should be promoted in order to encourage critical mass of project deal flows and strengthen the specialised expertise of internal staff of these organisations.

Various models of such groupings and partnerships –for instance the Technology Transfer Alliances – exist and could serve as examples [e.g. Innovation Transfer Network (ITN) in the United States, and Sociétés d'Accélération du Transfert de Technologies (SATT) in France. These initiatives differ according to the methods to mutualise knowledge transfer services, from the creation of networks and consortiums where some resources and shared and exchanges encouraged, to the merger of TTOs. The models also vary according to the logic of mutualisation, regional (one TTO to serve all universities and research institutions in a given region) or thematic (specialised ‘hubs’ of TTOs in specialised thematic areas).

Note

← 1. The detailed assessment framework is presented in Annex A.