Table of Contents

  • In the post-crisis world, and with a still fragile recovery, we are facing significant economic, environmental and social challenges. While no single policy instrument holds all the answers, innovation is the key ingredient of any effort to improve people’s quality of life. It is also essential for addressing some of society’s most pressing issues, such as climate change, health and poverty.

  • The past two years have seen reduced potential output growth, increased unemployment and soaring public debt. To recover and move towards a more sustainable growth path, new sources of growth are urgently needed.

  • This chapter presents the innovation policy context and discusses why governments need to develop a strategic approach to fostering innovation. It shows that innovation, broadly defined, is a key driver of growth performance and of economic growth. It indicates that it is essential for all governments to develop policies to strengthen innovation performance and outcomes. Because innovation takes various forms, they can adopt different policies and instruments. The mix of appropriate policies to foster innovation depends on many factors; it is important to recognise that “one size does not fit all”.

  • This chapter presents a brief picture of the innovation landscape. It discusses how innovation is defined and measured and how the concept has broadened to include nontechnological activities such as organisational change and marketing. It presents a selection of data and indicators which show that not only R&D but various other inputs are needed for effective innovation. It looks at how the innovation process has opened up and why collaboration has become a key to innovation. It also examines the shifting geography of innovation, the emergence of new global players and the global competition for talent.

  • People are at the heart of the innovation process, and this chapter explores the roles they play. Innovation relies on a skilled labour force, not only for high-technology and research sectors but throughout the economy and society. More networked innovation processes enable broad participation in the innovation process, beyond corporate R&D laboratories to users, suppliers, workers and consumers in the public, business, academic and nonprofit sectors. Enabling people throughout the economy and society to participate in innovation will provide new ideas, knowledge and capabilities, and enhance the influence of market demand on innovation. Policies need to reflect and encourage their broader engagement.

  • This chapter discusses innovation in the business sector and policies for strengthening innovation in firms. It draws attention to the importance of good framework conditions and regulations that do not impede innovation and create a sound business environment. This includes well-functioning product, labour and financial markets and openness to domestic and international competition. Specific policy areas for particular attention are the public and private financing of innovative efforts and the fostering of the start-up and growth of new firms.

  • Government plays an essential role in creating and applying knowledge and in fostering public and private investment in innovation. This chapter focuses on the wide array of support that is needed for innovation. It examines the public research system; investment in knowledge infrastructure and general purpose technologies; the importance of knowledge flows, networks and markets; and how governments can be innovative actors in the delivery of public services.

  • This chapter examines a number of global challenges currently facing governments: including addressing climate change, meeting global health issues and bridging the gaps in economic development. Innovation is crucial to tackling these public challenges and a mix of policy instruments may be necessary to reach sustainable solutions. The chapter therefore discusses the importance of bilateral and multilateral international cooperation strategies as well as the need for more concerted approaches to accelerate technology development and diffusion.

  • This chapter focuses on the key role of governance and measurement of innovation performance. It examines how governance arrangements and policy practices have changed over the past two decades, and which challenges have been emerging, both as a result of processes such as globalisation and regionalisation, and new developments and innovations in the organisation of government and policy design and delivery. Key areas in which governance needs to be improved are discussed, including mobilising actors and resources for innovation; improving co-ordination and coherence of policies and different layers of government; addressing worldwide the great societal challenges that need to be faced on a global scale; setting priorities in resource allocation accordingly; and improving the measurement of innovation.

  • This chapter draws attention to the broad multidisciplinary perspective of this report, which builds on OECD work in the area of innovation. It outlines some elements of the future agenda for analysis and policy making in the area of innovation.

  • This annex summarises the involvement of OECD Committees and Working Parties in the project, the stakeholder consultation process and events contributing to the OECD Innovation Strategy.