TOOC Module 2

Week 2 National Innovation Strategies

This module’s objective are:

  • to understand the efforts being made by governments to develop and implement national and regional innovation strategies
  • to look specifically at innovation policies designed for the North

 

Since the emergence of the activist state (or national/regional governments) in the 1930s, politicians and government officials have sought ways to promote economic growth.  Before that time, and with the exception of more radical and Communist approaches such as those followed in the Union of Soviet Socialist Republics, governments believed that the economy operated on the basis of what Adam Smith described as the “invisible hand” of the marketplace.  The larger imperial powers, like England, France, Spain, Germany and others, encouraged economic growth through global expansion and the control and development of colonies.  Under this system, peripheral regions, such as most of the Circumpolar World, attracted little attention unless major resource deposits were discovered or military and strategic considerations forced nations to invest in remote regions.

This approach changed following the Great Depression, as governments sought to jump start their economies and, once the crisis ended, to avoid a return of poverty and hardship. This ushered in the great age of the welfare state, when many governments in the developed world accepted the advice of John Maynard Keynes, who argued that state intervention through investment and government spending could smooth out the business cycle (removing the worst effects of recessions or boom times).  This involved the creation of new government programs, special investments in the economic and social well-being of the poorest citizens and regions.  It was in this period–roughly from the 1950s to the 1980s, with substantial regional variations–that national governments spend heavily in northern areas, building many of the roads, towns, airfields and other facilities that “opened” the region to more rapid development.

This approach could not be sustained, as many governments ran into severe financial problems in the 1970s and 1980s, forcing the adoption of neo-liberal (small government approaches, characterized by debt reduction, lowered spending and lower taxes) government strategies.  National governments were no longer making such large investments in regional economic development, which previously included infrastructure spending, nationally-run resource companies in some areas, the militarization of many northern areas, and direct subsidies to northern companies and regional governments. Previously governments sought to create economic growth through industrial policies and direct intervention in the economy, but they now looked for other ways to support the pursuit of prosperity.  As technological advancements accelerated through the 1970s and 1980s, leading thinkers like Christopher Freeman argued that governments should invest in the “innovation economy” by creating the preconditions for innovation success.

This impulse resulted in the development of national innovation strategies.  The model here was quite simple.  While there was some investment (usually through tax breaks and subsidies) in individual companies, the larger focus of governments around the world was on creating competitive innovation environments.  They did so through commitments to key areas:

  • Expanding post-secondary enrollments with a bias toward university education and scientific and technical training.  The graduates would be the workers in what people believed would be the “knowledge economy.”
  • Supporting basic research, largely through universities, on the belief that the laboratory and shop developments would filter out into the economy in the form of commercializable products.
  • When these investments did not spontaneously produce the level of commercialization expected — although there were some successes, particularly in Japan, the United States and Germany — governments started to invest in commercialization offices.  These took the form of patent support, business development programs, incubators and other government-funded and often university and college affiliated research groups.

These three pillars — education, research and commercialization — formed the foundation of national innovation strategies and became a cornerstone of national economic planning around the world.  While it was odd that national efforts to be innovation were, in fact, imitative (e.g., they copied the policies of other countries), governments nonetheless found the approach to be quite popular.  Parents and students loved the idea that a university education would place them at the forefront of the global economy.  Universities celebrated the central role played by academic researchers, graduate students and laboratories, and local and regional business communities appreciated the commercialization efforts, which supported general economic growth and prosperity.

This was, in effect, government intervention in the economy through indirect means. There was no nationalization of firms, no massive investments in new factories, no huge commitments to infrastructure beyond that made to the universities and colleges.  The national innovation strategies were optimistic, but they could look at the success of companies like Apple, Samsung, Toshiba and Nokia and show how the innovation economy worked.  Certain areas — Silicon Valley (California), Oulu (Finland), Israel, Waterloo (Canada), Boston (Massachusetts in the USA), Singapore and Taipie (Taiwan) — demonstrated the economy-building effectiveness of innovation policies.

However, the North did not have an obvious role in the new economy.  The region had few post-secondary institutions, mostly colleges and a few small universities.  While there were some successes built around universities (Umea in Sweden, University of Alaska-Fairbanks, UiT in Tromso, Norway, and particularly Oulu, Finland), the simple truth was that the biggest universities and the vast majority of the researchers were in the south.  The big cities and southern areas had other advantages, including access to investment capital, a ready supply of trained workers (often called Highly Qualified Personnel), proximity to markets, and greater support from national and regional politicians.  The long-standing challenges of northern economic development now faced the additional barrier of overcoming the innovation deficits of the Far North.  While optimists argued that innovation could and would occur where entrepreneurship and new ideas came together — a substantial truth — the reality was that the Far North was far from competitive.

Centres of innovation, almost all in the South, not surprisingly turned their attention to southern and urban problems and, more generally, to global markets.  Only small numbers of researchers and companies looked to northern opportunities and problems, and those few who did, focused on resource development issues, not quality of life concerns.  Some of the innovations, as we shall see, transferred well to the North, but many did not.  Simply put, national innovation was really innovation for southern and urban environments and had only a small and marginal connection to northern concerns and needs.  But here is the major problem.  National innovation strategies had, in many countries including almost all of the Circumpolar nations (Russia partially exempted), become the primary means of promoting long-term economic development. In the Far North, as had been the case for generations, the resource economy remained the primary focus for governments, the business community and would-be entrepreneurs.

http://www.conferenceboard.ca/hcp/details/innovation.aspx

National Innovation Strategies (Canada, Finland)

Here is additional information on government-driven national innovation.

National Innovation Strategies

 

Understanding innovation requires an appreciation of the details of national innovation strategies.  The three items provided here for your review offer insights into national innovation strategies in Canada and Finland and give you a good sense of how these countries imagine the creation and maintenance of the innovation economy.

While national innovation is very complex, efforts have been made to describe it in more direct terms.  For several decades, conversation focused on what was called the “triple helix” of government, business and universities coming together to forge innovation partnerships. A great deal of money was invested on the belief that that forging and mobilizing these collaborations would result in the production of technology-based science and technology that would, in turn, generate economic opportunity and prosperity.
You can summarize national innovation strategies even more simply than this.  My view is that national governments have bought into what I describe as the “innovation equation.”  This basic formula outlines the inputs and expected outputs from national innovation.  (Commercialization refers to the services and programs designed to help inventors and scientists convert their discoveries to commercially viable products.) The formula goes like this:

 

Education + Basic Scientific Research + Commercialization Efforts = Jobs and Prosperity
The formula is very attractive. Governments can control the first three elements.  They can expand college and university education and encourage families to invest in such personal development.  They can fund more basic research and create additional research laboratories and facilities.  And they can create commercialization offices, tech transfer offices, and patent offices, all designed to help the scientists convert their discoveries into economically important products.
This seemed, on the surface, to replicate the magical circumstances that turned California’s Silicon Valley into a global innovation hub.  So it is hardly surprising that so many governments, universities and community leaders bought into the concept.
Life rarely unfolds as easily as we – or governments – would like.  Investments in education, research and commercialization did not always produce the jobs and prosperity everyone expected.  But the logic was so clear and seemingly simple that governments and their supporters have been reluctant to move away from this formula – at least in part because no suitable alternative has emerged.
It is important, as we explore North-specific issues, to understand the national framework and expectations in the Arctic states.  The sections below provide useful high-level summaries of national innovation strategies.  Read them quickly and get a sense of government priorities and program elements. You will, I think, quickly realize how much importance the governments attach to national innovation as a key element in economic planning and development.  You will also look hard to find detailed considerations of northern regions.

 

Canada:

Mobilizing Science and Technology to Canada’s Advantage, 2007

Summary of the Strategy

Mobilizing Science and Technology to Canada’s Advantage fosters Canada’s competitiveness through investments and activities in three key areas: entrepreneurial advantage, knowledge advantage, and people advantage. It is founded on four guiding principles:

  • Promoting world-class excellence
  • Focusing on priorities
  • Fostering partnerships
  • Enhancing accountability

Priority areas:

  • Environment science and technologies
  • Natural resources and energy
  • Health and related life sciences and technologies
  • ICTs

Seizing Canada’s Moment: Moving Forward in Science, Technology and Innovation, 2014

The Government of Canada stated its intention to release an updated STI Strategy in the October 2013, The public consultation about the new strategy ended on February 7, 2014.

 

Denmark

A Denmark that Stands Together, 2011

The present Danish Government took office in October 2011. On this occasion the Government published a platform, A Denmark that Stands Together, describing its overall policy plans in all major policy areas.

The strategy creates basis for growth and contributes to providing economic latitude that facilitates investment in measures to enhance welfare, education and research. Nine points of reform of which three focusing on STI:

  • Investments in research and education (upper secondary education, higher education programme, vocational education and training, and life-long learning);
  • Increase productivity so as to ensure Denmark rises towards the top among the OECD countries;
  • Maintain the so-called Sustainability Index (HBI) positive.

 

Finland

Growth Through Expertise: Action Plan for Research and Innovation Policy, 2012

The aim of the Action plan is to concertize and enhance the implementation of the government’s research and innovation policies and document central development measures and adjustments required in the final half of the present term of government.

 

Iceland

Act on Government Support for Technology Research, Innovation and Industry Development, 2009

Law on Support of Innovation Companies, 2007

 

Norway

An Innovative and Sustainable Norway, 2009

Climate for Research, 2009

The White Paper An Innovative and Sustainable Norway aims to:

Improve the knowledge base and establish strategy councils in specific areas (for SMEs and environmental technology further to those for tourism and the maritime industry).

Increase innovation by advancing:

  • A creative society with a sound framework and a favourable climate for innovation;
  • Creative people who develop their resources and competences, while grasping the possibility to apply them; and
  • Creative undertakings that develop profitable innovations.

The White Paper on research Climate for Research defines nine goals and output areas. These output goals are meant to complement the long-term ambition that total R&D expenditure will reach 3% of GDP. The new goals imply a new direction in research policy with a stronger emphasis on:

  • Global challenges;
  • Welfare issues in research; and
  • Impacts and results (one goal is to introduce a systematic approach to indicators, evaluations and other types of assessments of research).

 

Russian Federation

Strategy of the Innovation Development of the Russian Federation to 2020, 2011 (summary, no full version in English)

OECD Reviews of Innovation Policy: Russian Federation, 2011

Russia’s strategy sets the long-term orientation of innovation development actors and provides guidance on the financing of basic and applied science and the support to commercialization  It is based on the results of a comprehensive evaluation of Russia’s innovation capacity and on long-term scientific and technological forecasts.
The strategy has the following overarching objectives:

  • Build-up human capital;
  • Radically increase the innovation activities of the business sector;
  • Create a climate of innovation in the public sector;
  • Build an efficient and dynamic R&D sector, including with regards to the commercialization of R&D results;
  • Make Russia’s economy and innovation system more open and better integrated into the global innovation system.

 

Sweden

Research and Innovation Bill, 2012

Swedish Innovation Strategy, 2012

Every four years, the Government presents a Research and Innovation Bill that deals with the Swedish government’s priorities for the next four year period. On Thursday, October 11, 2012, it put forward a bill to the Riksdag entitled Research and Innovation, which contains priorities for the period 2013-2016.

The purpose of the strategy is to contribute to a climate with the best possible conditions for innovation in Sweden with year 2020 in sight. People and organizations in industry, the public sector and civil society will be able to develop and more effectively contribute to new or improved solutions meeting needs and demand.

 

United States

A Strategy for American Innovation: Securing Our Economic Growth and Prosperity, 2011

Executive Summary (Links to an external site.)

The strategy was updated and re-released in February 2011 and continues to serve as the Obama Administration’s plan for STI policy. Although this is an official administration document, it does not have the status of a national plan because it is the product of the current Administration (government) and has not been ratified by the U.S. Congress.

Its objectives are:

  • Invest in the building blocks of American innovation, including R&D and human, physical and technological capital;
  • Promote competitive markets that spur productive entrepreneurship; and
  • Catalyze breakthroughs for national priorities such as developing alternative energy sources and improving health outcomes.

 Science, Technology and Industry Outlook by OECD, 2014

Countries love to compete and a raging statistical war engulfs the world. Who has the best education systems, the most successful universities, the greatest investments in research and development.  Innovation has become a matter of national pride and, therefore, international evaluation.

Read through a selection of these OECD reports on the national innovation systems in selected countries.

  1. Canada
  2. Finland
  3. Denmark
  4. Iceland
  5. Norway
  6. Russian Federation
  7. Sweden
  8. United States

 

OECD Innovation Strategy. Key Findings

OECD Innovation Strategy Key Findings

 

Andrew Wyckoff, OECD innovation expert, explains innovations’ significance for economic growth and development:

 

 

Innovations’ significance for economic growth and development

 

Graphics and tables on how different countries fund business research and development:

 

How different countries fund business research and development