Innovation Policy and Performance

Innovation Policy and Performance

A Cross-Country Comparison You do not have access to this content

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01 June 2005
9789264006737 (PDF) ;9789264006720(print)

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This publication examines the relationship between innovation policy and economic performance in six OECD countries – Austria, Finland, Japan, the Netherlands, Sweden and the United Kingdom.  In-depth analyses highlight countries’ strengths and weaknesses in innovation, as well as the effectiveness of their innovation policies in driving economic performance.  Taken together, the country studies constitute a rich evidence base which will be of considerable interest to innovation policy makers in all OECD countries.  They indicate that countries share a need to adapt – or even profoundly change – their innovation policies in order to deal with opportunities and threats posed by new technological and economic developments.

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  • Innovation Policy and Performance
    In advanced industrial countries, innovation and exploitation of scientific discoveries and new technology have been the principle source of long-run economic growth and increasing social well-being. In the future, the innovation performance of a country is likely to be even more crucial to its economic and social progress. Countries whose firms fail to innovate will increasingly find themselves in direct competition with newly industrialising countries with lower labour costs and an increasing mastery of existing technologies and business methods. The development and exploitation of novel products, processes, services and systems, and the constant upgrading of those which a country...
  • Les politques et performances en matière d'innovation
    Dans les pays industriels avancés, l’innovation et l’exploitation des découvertes scientifiques et des technologies nouvelles constituent la principale source de croissance économique sur le long terme et d’amélioration du bien-être social. A l’avenir, les performances d’un pays en matière d’innovation risquent d’être plus vitales encore pour son progrès économique et social. De plus en plus, les pays dont les entreprises n’innovent pas vont se trouver en concurrence directe avec des pays en voie d’industrialisation dont les coûts de main-d’œuvre sont inférieurs et qui maîtrisent de mieux en mieux les technologies et les méthodes commerciales existantes. La mise au point et l’exploitation de produits, de procédés, de services et de systèmes nouveaux et la mise à niveau constante de ceux qu’un pays produit déjà est la seule manière, pour les pays de l’OCDE...
  • Austria
    Austria looks back at an extended period of high economic performance, and is today among the OECD countries with the highest level of GDP per capita. The growth paradigm formed during the period of moving upstream towards the group of high-income countries was based on high and stable rates of investment and reliance on technology imports complemented by "absorptive capacities". Diffusion of new technologies was facilitated by a stable macro-economic environment conducive to a high rate of capital formation and by the availability of a well-trained labour force.
  • Finland
    Since the mid-1990s, Finnish science, technology and innovation (STI) policies have received wide attention across the world. The country’s national innovation system is seen as highly efficient in numerous recent international evaluations, and the "Finnish model" has been taken as a benchmark in many countries. One might ask how it was possible for Finland, while being limited in its human and capital resources, to become a high-tech economy with world-class STI policies so suddenly. However, looking at the evolution of the STI regime in Finland it becomes obvious that the success story did not evolve that quickly. One could argue that the case is actually the opposite.
  • Japan
    The OECD Growth Project indicated that Japan’s economic performance sharply declined from the 1980s to the 1990s. Japan is categorised among those "countries where trend growth declined or stagnated", and the decrease in the GDP per capita growth rate stands out from other countries that experienced decline or stagnation during these two decades (Figure 4.1) (OECD, 2001a). Other quantitative data also reflect Japan’s declining economic performance. Although annual Japanese GDP per capita in USD still exceeds the OECD average, the annual growth rate of GDP is the lowest of all, and the annual growth rate of multi-factor productivity (MFP) is far below OECD average (see Annex 2, Figure A2.3). On the other hand, Japan is ranked third among OECD countries in GERD as a percentage of GDP, and Japanese BERD as a percentage of GDP is the third highest. Also, in the data on R&D performed by the non-business sector as a percentage of GDP, Japan maintains a level exceeding the OECD average (Figure A2.3). Although it must be noted that there is some time lag between R&D investment and...
  • Netherlands
    The Netherlands is one of the most affluent countries within the OECD. Its high level of income and wealth is based on a highly open economy. Openness has been highly beneficial for the country’s long-term development. It also requires rapid and thorough adaptations and policy responses to shifts in the international environment. As a matter of fact, the Netherlands has entered a challenging phase. After more than a decade of high growth it has seen a sharp decline in its macro-economic performance in the course of the most recent downturn of the business cycle. These developments have exposed some weaknesses in Dutch economic performance, in particular a weak productivity growth. For high economic growth to be sustainable in the longer term, a new growth paradigm,...
  • Sweden
    Sweden’s performance in science and technology is high by most standard indicators. Nevertheless, Sweden has not always succeeded in sufficiently translating its high investment in knowledge or its excellent science into high economic performance. Taking a long-term perspective, Sweden’s position as a leading high-income country in Europe has gradually eroded. In the early 1990s the country went through a deep recession. Competitiveness was under pressure of increasing cost unparalleled by productivity growth. Growth accelerated in the second half of the 1990s, supported by a new macroeconomic framework put in place in response to the crisis and accompanied by largescale investment in knowledge. Nevertheless, it is a challenging task to sustain high growth while maintaining Sweden’s welfare state. Boosting productivity growth – through innovation and other means – would be instrumental in achieving these goals. At...
  • United Kingdom

    A wide variety of factors influence the innovation performance of an economy. During the UK’s recent Innovation Review the following were identified as being some of the most important:

    • Macro-economic performance. A past history of macro-economic instability can affect incentives to innovate through the uncertainty it creates and the impact this has on company financing decisions. Access to finance is important. The risky nature of innovation and the – often – heavy initial investment required to bring a project to fruition suggests that issues of finance are likely to particularly crucial for successful innovation (Arrow, 1962).

  • Annex 1. Guidelines for Preparing Country Notes
    Participating countries were asked to prepare short accounts of their own innovation performance, using a set of qualitative and quantitative indicators. They were asked to give their own overall assessment of the relative strengths/weaknesses of their national innovation system (NIS) and of the relationship between their innovation performance relates and the overall stance of the country’s innovation and RTD policy, including the implementation of specific policy instruments (e.g. government-funded R&D, patenting and licensing policies for public research organisations, public/private partnership programmes, cluster policies). The OECD Secretariat provided countries with a...
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