Innovation at National Scale

This week, a new report which compares the innovation performance of the European Union’s member countries, emerging countries such as Brazil and China, and the US and Japan came out.

Each country was assigned a score based on a range of national innovation “indicators”, things that included number of patents, doctoral degrees awarded, and similar.

I’ve summarised the results in the table below which shows innovation effectiveness compared to Europe:

Country 2009 2010
USA 48% better 49% better
Japan 39% better 40% better
China 57% worse 55% worse
Russia 37% worse 37% worse
Brazil 58% worse 58% worse
India 52% worse 53% worse

Table: Innovation Performance compared to European Union

Now, at a national scale, such measures are an interesting composite, in my view, of the effect of both policymaking and sentiment in the private sector. Of course, one is deeply dependent on the other, but there is a really important point that’s revealed in the data, and it is this: if innovation is truly going to be the driver of economic value in the future, Europe is in deep trouble.

The USA and Japan have systemic measures laced through their socio-economic systems which mean in the long term – if we say innovation is going to be the driver of value – they will survive a globalised environment.

Russia and India’s indicators are flat or slipping, so either their government and innovators will partner to do something amazing, or they’re going to be out of the game in the long term.

But China and Brazil’s performance is on a significant upswing. Those are both economies with dynamic populations and increasingly innovative policy environments. They’re also populous, and don’t have the systemic layers of regulation and burocracy that hampers you in the EU.

I mean, for example, have a go at the European Working Time Directive, which limits the amount of work an employee is able to do in a given week. Now, I’m not for a moment saying that it is right to abuse a workforce, but other economies don’t have limits on their workforces in this way. It is something that makes the EU less competitive.

Now, here in Europe, most countries are experiencing the harshness of public sector cuts as national governments try to find ways to balance their books. Taxes are increasing, and citizens are forced to shoulder new burdens, because the alternative is to pass the excesses of the last few decades to coming generations.

But the figures in this report paint a quite grim future prospect, because even if half a decade of national pain pays off, those countries in Europe who have not created systemic innovation capabilities may be worse off than they are now. Their share of the global growth pie is going to go down, not up.

I think policymakers understand this. And I know the private sector does.

But what is needed now is the kind of concerted action that we’re seeing in balancing the national finances applied to solving systemic innovation failures in Europe. That will be at least as hard a task as the financial one presently being faced, and probably be as expensive.

I fear, though, that countries are like companies on the subject of innovation – they say all the right things, but unless they’re faced with a near death experience, innovation is a nice-to-have.

A near death experience is not a desirable thing at a national level, for obvious reasons which are being played out across Africa presently. But what else is going to force the kinds of change that will make put Europe’s innovation infrastructure at the top of the league table?

4 Responses to“Innovation at National Scale”

  1. February 8, 2011 at 3:08 am #

    Interesting but I’m a bit concerned about where this might lead us.

    We use this word “innovation” as if we all agree what it means but I’m not sure we do.

    So for instance, the survey suggests that taking out lots of patents and having lots of degrees is somehow a measure of innovation. Some of us would suggest that patents are less a signal of innovation than of control and many fantastic innovations, the sorts brought about by social entrepreneurs, would never require a patent. The rigid bounds of intellectual property arguably stifle innovation… it’s at least a moot point. Counting doctoral degrees begs some questions too…

    And then “innovation” could be used as a stalking horse for things like, er, extending working hours. Some of us might regard working hours directives as an innovation itself, one with a variety of consequences, though not necessarily all positive.

    And don’t get me started on the preposterous precision of “59%” etc.

    Maybe there’s a good conversation to be had about Europe’s economic prospects or social policy, but yoking it to “innovation” strikes me as a confusing. And perhaps a cover story for what might some rather un-innovative neo-liberal economics?

    • James Gardner
      February 8, 2011 at 7:26 am #

      These are good points, Johnnie, and I know that noone can agree on what innovation is. The thing I liked about the survey, though, is that it blended so many indicators. That’s why I quoted from it.

      I think it is sensible to try to measure innovation performance, even if the measures we have today are crude. The attempt at measurement is often a catalyst for understanding, after all.

      But I do see your point.

  2. February 8, 2011 at 9:08 pm #

    Let me push it a little further. Innovation is inherently a practice of small, loosely structured groups, some that have not yet reached the stage of “organisation”. I would bet that effective innovation (ie ideas that come to fruition) is inversely proportional to the level of organisation and structure within which the work is done and that process continues, with occasional hiccups until sclerosis sets in and death intervenes.

    I also assert that innovation is an organic process that cannot be managed, canalised or commanded and that, above all, like innovation at the cellular level, the vast majority of genuine innovations not only fail, but frequently lead to the death of the innovator.

    Instead of having departments, or leaders or, god help us we in in NZ now have one, a Department of Innovation, we should rename the process more honestly, something like “The Department of Massive Failure, Frequent Waste and Organisational Breakage that Produces Mostly Pains in the Arse.

    If we can cope with hosting such a group within our “organisation” then we have, by definition, not yet reached the state where innovation is no longer possible.

    BTW, Egypt, or anyway Tunisia, is currently the global centre of national innovation; do you REALLY want to see that level of disruption everywhere? All the time. On a COMPETITIVE basis?

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