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Are NZ's policy makers hampering global innovation?

26 Jan 16

A new report is putting the spotlight on policy makers and what kind of impact certain policies have on global innovation systems.

New Zealand ranks 28th in how its domestic policies support worldwide innovation, according to the report from Information Technology and Innovation Foundation (ITIF), a global technology policy think tank.

The report assessed 56 countries, which together comprise close to 90 =% of the world’s economy. The study looks at the extent to which, on a per-capita basis, a country’s economic and trade policies contribute to and detract from innovation globally.

“Robust innovation is essential for economic growth and progress,” says co-author Stephen Ezell, ITIF’s vice president for global innovation.

“As countries increasingly vie for leadership in the innovation economy, they can implement policies that try to benefit only themselves but harm the production of innovation in the rest of the world,” Ezell explains.

“Or they can implement ‘win-win’ policies that bolster their own innovation capacity while also generating positive spillovers for the entire global economy.

“For innovation to flourish around the world, we need a system that is doing much more of the latter,” he says.

While previous research has ranked countries based on innovation capabilities or outcomes, the ITIF report is the first to assess the impact of countries’ policies on the broader innovation system.

The authors examined 14 factors that not only support innovation domestically but have positive spillover effects globally, such as supportive tax systems and investment in R&D and human capital, and another 13 factors that have negative spillover effects, such as forced localisation and weak intellectual property protection.

According to Ezell, New Zealand’s 28th-place overall ranking reflected a combination of policies that the report found to be 30th best in their positive contribution to the global innovation ecosystem and also the 13th least damaging.

The report also found a strong correlation between countries’ contributions to global innovation and their levels of domestic innovation success, meaning that doing well domestically on innovation policy can also mean doing well for the world.

“While policymakers are primarily focused on the interests of their own citizens, they usually overlook the fact that adopting policies that also happen to be good for the global innovation ecosystem will compound the benefits for their citizens,” explains Robert D. Atkinson, ITIF’s president and a co-author of the report.

“Innovation altruism really does pay,” he says.

The report argues nations should undertake a series of policies to improve their impacts on worldwide innovation: 

  • ITIF urges policymakers, economists, and pundits to treat innovation as important as trade for optimising global growth.
  • The report calls on the global development and trade community to establish a framework that better distinguishes between policies that are beneficial for the world’s innovation ecosystem and those that are detrimental. Moreover, policymakers need to push back more strongly against the misguided, but popular, perspective that developed nation innovation comes at the expense of developing nation economies and that because of that, the world needs a strategy for redistributing innovation, rather than growing it.
  • ITIF argues leading nations should establish a Global Science and Innovation Foundation to fund scientific and engineering research on key global challenges, particularly through collaborative international research. 

“The world is significantly under-producing innovation that is needed to tackle global challenges, including boosting productivity, improving health, and protecting the environment,” Atkinson says.

“Policymakers need to better understand and more aggressively push back when countries try to advance their own interests at the expense of global innovation,” he explains.

“The world’s leaders need to articulate a more robust vision of commonly shared prosperity based on substantial increases in worldwide productivity and more innovative products and services.”

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