Innovation Report Card Suggests Room for Improvement

A new OECD report on New Zealand’s innovation policy has found that despite a sound macro-economic framework, New Zealand still lags in terms of per capita GDP and only invests in R&D at about one third of the OECD average. Some improvements to the innovation policy framework are proposed in the report such as refocussing business support programmes, promoting rollout of high speed Internet and addressing the research funding process.

The study also criticises the fact that a myriad of public agencies are involved in setting innovation policy and distributing funding for research and business support. Will we eventually see a unified agency involved in innovation policy and funding research, science and technology in concert with economic development initiatives?

The OECD report card does however give good marks for the establishment of the Venture Capital Investment Fund and the Seed Coinvestment Fund which provide public-private partnerships to encourage early stage investment into high technology ventures. But there is little analysis as to the performance of these funds. In the past they have been criticised publicly for a lack of investment activity.

The government invited the OECD to carry out the review and responds that some of the areas highlighted have already been addressed with recent policy changes. In particular there is renewed vigour in promoting business linkages into the publicly funded research sector. The Growth and Innovation Advisory Board is held up as an example of how R&D policy is connected to grass roots business; although little has been heard from this body of late.

Having been involved on the periphery of the technology innovation scene for the last five years I have gained a few impressions of my own which I will share. One of the difficulties with the whole sector has been that central and local government agencies tasked with drawing up and enacting economic development policy are in a constant state of flux. With endless rounds of restructuring and change there has not been consistent leadership on promoting innovation as an economic development tool. In any event, governmental agencies are so risk averse that directly involving them in innovation seems almost oxymoronic.

Secondly, the research, science and technology community is predominantly publicly funded through either universities or  Crown Research Institutes. Government agencies dictate research themes and economic development projects in accordance with political directives. But worthy initiatives sometimes struggle because of underinvestment or a failure to commit to long term funding. There is considerable rhetoric about “economic transformation” but it is not backed up by ongoing resourcing or visionary leadership. Because politicians are looking for deliverables within their term of office, there is little appetite for long term funding for the kinds of projects that can make economic transformation a reality rather than an aspirational goal. One only needs to look to the more substantive per capita investment levels of countries like Singapore, Malaysia and Ireland. 

Finally, new knowledge arises from innovation networks not from individuals. Combining complementary assets and resources leads to the kinds of creative processes that add real value to an economy. In recent years, policy has shifted away from investing in supporting the social networks that underpin innovation, despite past successes both here and abroad. The private sector is also underinvested in R&D, but this could be improved through greater collaboration. But collaborative projects do not come alive without vibrant and active communities of interest. Facilitating such communities should remain a priority for those involved in economic development.

[tags] innovation, networks, research, technology, OECD [/tags]

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