INNOVATION AND GROWTH RATIONALE FOR AN INNOVATION

INNOVATIONANDGROWTHRATIONALEFORANINNOVATIONSTRATEGYORGANISATIONFORECONOMICCO-OPERATIONANDDEVELOPMENTTheOECDisauniqueforumwherethegovernmentsof30democraciesworktogethertoaddresstheeconomic,socialandenvironmentalchallengesofglobalisation.TheOECDisalsoattheforefrontofeffortstounderstandandtohelpgovernmentsrespondtonewdevelopmentsandconcerns,suchascorporategovernance,theinformationeconomyandthechallengesofanageingpopulation.TheOrganisationprovidesasettingwheregovernmentscancomparepolicyexperiences,seekanswerstocommonproblems,identifygoodpracticeandworktoco-ordinatedomesticandinternationalpolicies.TheOECDmembercountriesare:Australia,Austria,Belgium,Canada,theCzechRepublic,Denmark,Finland,France,Germany,Greece,Hungary,Iceland,Ireland,Italy,Japan,Korea,Luxembourg,Mexico,theNetherlands,NewZealand,Norway,Poland,Portugal,theSlovakRepublic,Spain,Sweden,Switzerland,Turkey,theUnitedKingdomandtheUnitedStates.TheCommissionoftheEuropeanCommunitiestakespartintheworkoftheOECD.OECDPublishingdisseminateswidelytheresultsoftheOrganisation’sstatisticsgatheringandresearchoneconomic,socialandenvironmentalissues,aswellastheconventions,guidelinesandstandardsagreedbyitsmembers.©OECD2007Notranslationofthisdocumentma[e-mail]:RATIONALEFORANINNOVATIONSTRATEGY–3©OECD2007PrefaceUndoubtedlythecapabilitytoinnovateandtobringinnovationsuccessfullytomarketwillbeacrucialdeterminantoftheglobalcompetitivenessofnationsoverthecomingdecade.Thereisgrowingawarenessamongpolicymakersthatinnovativeactivityisthemaindriverofeconomicprogressandwell-beingaswellasapotentialfactorinmeetingglobalchallengesindomainssuchastheenvironmentandhealth.Notonlyhasinnovationmovedtocentre-stageineconomicpolicymaking,butthereisarealisationthataco-ordinated,coherent,“whole-of-government”approachisrequired.ManyOECDmembercountrieshaveadoptednationalstrategicroad-mapstofosterinnovationandenhanceitseconomicimpact.Evencountriesthathavegenerallyrefrainedfromactiveindustrialpolicyinrecentyearsnowseeknewwaystoimprovetheenvironmentforinnovationinordertoboostproductivityandgrowth.TheUnitedStates,forexample,cameforwardwiththe“InnovateAmerica”strategyin2005.TheEU’s“LisbonAgenda”,initiatedin2000,hasnowbeenupdatedandstrengthened.Inadditiontotherapidadvancesinscientificdiscoveryandingeneral-purposetechnologiessuchasICTsandbiotechnology,theacceleratingpaceofinnovationisbeingdrivenbyglobalisation.ThesepervasivetrendswerepickedupatthesummitoftheG8atHeiligendamminJune2007whichidentifiedresearchandinnovationasareasrequiringhigh-levelpolicydialoguebetweentheG8membersandmajoremergingeconomies.AshorterversionofthisdocumentwassubmittedtothemeetingoftheOECDCouncilatMinisteriallevel“Innovation,GrowthandEquity”heldinParisinMay2007.Itprovidedsupportingevidence,basedonthefindingsandrecommendationsemergingfromrecentOECDwork,tounderpintheMinisterialdiscussionsonhowpoliciesshouldbeupdatedtoaddressthechangingrelationshipsbetweeninnovationandnationalprogress.Atthatmeeting,MinistersaskedtheOECDtodevelopabroad-rangingInnovationStrategytobuildonexistingwork,addressremainingknowledgegaps,andaboveallprovideacross-disciplinarymutually-reinforcingpackageofpolicyelementsandrecommendationstoboostinnovationperformance.CHAPTERTITLE–5©OECD2007ExecutiveSummaryThechallengeToday,innovationperformanceisacrucialdeterminantofcompetitivenessandnationalprogress.Moreover,innovationisimportanttohelpaddressglobalchallenges,suchasclimatechangeandsustainabledevelopment.Butdespitetheimportanceofinnovation,manyOECDcountriesfacedifficultiesinstrengtheningperformanceinthisarea.Indeed,manyOECDcountrieshaveseenlittleimprove-mentinproductivityperformanceinrecentyearsdespitethenewopportunitiesofferedbyglobalisationandnewtechnologies,especiallytheinformationandcommunicationtechnologies(ICT).AreformagendaGovernmentpoliciescansupportinnovationbycontinuallyreformingandupdatingtheregulatoryandinstitutionalframeworkwithinwhichinnovativeactivitytakesplace.Inthiscontext,reformsareneededtomakepublicpolicyandregulatoryframeworkmoreconducivetoinnovationinarangeofpolicyareasfromthegeneralbusinessenvironment—especiallyintheservices,particularlyinthenetworkindustries—tointernationaltradeandinternationalinvestment,financialmarkets,labourmarkets,andeducation.Governmentscanalsoplayamoredirectroleinfosteringinnovation.PublicinvestmentinscienceandbasicresearchcanplayanimportantroleindevelopingICTandothergeneral-purposetechnologiesand,hence,inenablingfurtherinnova-tion.Thishighlightstheimportanceofreformingthemanagementandfundingofpublicinvestmentinscienceandresearch,aswellaspublicsupporttoinnovativeactivityintheprivatesector.Thelattercallsforanappropriatemixofdirectandindirectinstrumentssuchastaxcredits,directsupportandwell-designedpublic-privatepartnerships,supportforinnovativeclustersandrigorousevaluationofsuchpublicsupport.Inviewofthechangingenvironmentforinnovation,itisalsoimportanttoconsiderwhetherthecurrentsystemofIPRrulesandpracticescontinuestostimulateinnovationwhileall