The OECD Innovation Strategy 2015

“You can see it everywhere but in the productivity statistics.” Robert Solow’s 1987 quip* on the effects of the computer age might apply just as well to innovation: however central it may be to advanced and emerging economies and societies, its impact is not so easy to quantify. 
 
Nevertheless, innovation is a key driver of productivity, growth and well-being, and plays an important role in helping address core public policy challenges like health, the environment, food security, education and public sector efficiency. Innovation-led productivity growth will become even more important in the future to address key challenges like ageing populations and climate change.
 
But seizing innovation’s potential, actually turning it into growth and jobs, improved well-being and health outcomes, or solutions to problems like climate change remains a challenge for many countries. To harness its contribution, policy makers need to foster a sound environment for innovation, invest in the foundations, isuch as research, education and knowledge infrastructure, and address critical barriers to innovation.
The quick read
Policy makers can do better in marshalling the power of innovation to help achieve core objectives of public policy. Strong leadership at the highest political levels will be essential.
 
There is no silver bullet: policy makers will require a mix of policies for innovation, which will vary depending on the context, and that go beyond narrowly defined research and innovation policies.
 
Concentrating policies on five concrete areas for action will help governments foster more innovative, productive and prosperous societies, increase well-being, and strengthen the global economy in the process:
 
Effective skills strategies: Innovation rests on people that have the knowledge and skills to generate new ideas and technologies, bring them to the market, and implement them in the workplace, and that are able to adapt to structural changes across society. But two out of three workers do not have the skills to succeed in a technology-rich environment. A broad and inclusive education and skills strategy is therefore essential.
 
A sound, open and competitive business environment that encourages investment in technology and in knowledge-based capital, that enables innovative firms to experiment with new ideas, technologies and business models, and that helps successful firms to grow and reach scale. Policy should avoid favouring incumbents as this reduces experimentation, delays the exit of less productive firms and slows the reallocation of resources from less to more innovative firms.
 
Sustained public investment in an efficient system of knowledge creation and diffusion: Most of the key technologies in use today, including the Internet and genomics, have their roots in public research, illustrating how essential public investments are. At a time when the world economy faces many longterm challenges, public investment needs to focus on durable benefits, rather than short-term outcomes. Support for business innovation should be well balanced and not overly rely on tax incentives. Welldesigned, competitive grants need to complement tax incentives, can be better suited to the needs of young innovative firms, and can also be focused on areas that have the highest impact.
 
Increased access and participation in the digital economy: Digital technologies offer a large potential for innovation, growth and greater well-being. However, policy action is needed to preserve the open Internet, address privacy and security concerns, and ensure access and competition. Digitally enabled innovation also requires investment in new infrastructure such as broadband, but also in ensuring we have enough spectrum and Internet addresses for the future.
 
Sound governance and implementation: The impact of policies for innovation depends heavily on their governance and implementation, including trust in government action and the commitment to learn from experience. Policy learning rests on a well-developed institutional framework, strong capabilities for evaluation and monitoring, the application of identified good practices, and an efficient, capable and innovative public sector.

 

Note and further reading
* Robert Solow, "We'd better watch out", New York Times Book Review, July 12, 1987, page 36.
 
OECD (2013), OECD Skills Strategy, OECD Publishing, Paris, http://skills.oecd.org/documents/oecdskillsstrategy.html.
 
OECD (2015), The Future of Productivity, OECD Publishing, Paris. www.oecd.org/economy/the-future-ofproductivity.htm.
 
OECD (2015), The Innovation Imperative in the Public Sector: Setting an Agenda for Action, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264236561-en.
 
OECD (2015), Digital Economy Outlook, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264232440-en.
 
OECD (2015), The Innovation Imperative: Contributing to Productivity, Growth and Well-being, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264239814-en.
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