Australia ranked 17th in Global Innovation Index
Monday, 28 July, 2003
A new report has identifed three key factors that determine a nation's capacity for innovation, and has found that Australia needs a more co-ordinated and committed approach to innovation policy, if it is to become a leading innovator economy.
Joshua Gans, Professor of Management (Information Economics) at Melbourne Business School, has co-authored (with Scott Stern of Northwestern University) a report that presents new findings about the drivers of global innovation in advanced nations.
Titled "Assessing Australia's Innovation Capacity in the 21st Century", the report provides an assessment of the evolution of Australian innovation capacity over the past two decades.
Prof. Gans says this report demonstrates how a nation's relative performance in producing global innovation is linked to three factors: investments in a common innovation infrastructure; the vitality of the innovations environment in national industrial clusters; and the quality of linkages between this infrastructure and a nation's industrial clusters.
According to Prof. Gans three findings from the study stand out. "First, no single factor is primarily responsible for the ability to innovate at the global frontier," he says. "Rather, a healthy innovations environment depends on strength in human resources, company investment and in several public policy dimensions.
"Second, while overall R&D investment is important, it is ultimately companies who commercialise innovation, and so innovative capacity is quite sensitive to the share of R&D expenditures financed by the private sector.
"Third, because of their role in facilitating knowledge transfer among researchers, companies and industries, universities play a key role in enhancing national innovative capacity. Specifically, innovative capacity is enhanced in the share of research performed by universities, regardless of whether it is financed by the public or private sector.
"Over the past quarter century," says Prof. Gans, "Australia has transformed from a classical 'imitator' to a second-tier innovator economy." But despite this progress, he warns key mismatches remain that prevent these resources from reaching their full potential. "For example, while Australia stands out as a generator of graduates in biological sciences, most private R&D dollars go elsewhere."
And although in recent times Australia has benefited from microeconomic reforms, Prof. Gans says we still need to improve the environment for innovation, including better linkages between public and private initiatives.
"As a consequence of these mismatches, Australia is still a second-tier innovator economy."
In a forward to the report Professor Michael E Porter (of Harvard University) writes that "these findings, and the policy recommendations that flow from them, should be at centre stage as Australia faces the next competitiveness challenge."
"As Gans and Stern point out, historical strengths in agricultural and life sciences research, complemented by a distinct proclivity among Australian R&D personnel towards the life sciences, make the potential for cluster development in these areas particularly promising. A strong system of research-oriented universities and related institutions for collaboration will be particularly important for Australia to evolve into a first-tier innovator economy."
Prof. Gans says Australia still needs a clearer focus for policy and investment around innovation, and should focus on innovations in areas of historical strength, citing agriculture, the wine industry and biotechnology as examples.
"While 'picking winners' is a recipe for policy failure, Australia can position itself as a global innovator by allowing labour, capital and domestic markets to reward long-term investments in areas of specific strength," he says.
Item provided courtesy of The University of Melbourne
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