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Getting the Most out of our National Innovation System

By Karen Curtis - posted Wednesday, 15 March 2000

In a globalised world, innovation is vital to increased competitiveness for business. For the economy as a whole, innovation lies at the heart of productivity growth. The National Innovation Summit held in February 2000 examined the fundamental question of how Australia could obtain maximum economic and social benefit from our National Innovation System.

There have been numerous studies on R&D, technology uptake, higher education research and other aspects of the Australian innovation system over the last ten years. Most have not resulted in the implementation of policies to improve economic growth. However, business, governments, the research community and academia should collectively develop measures that address impediments to making the most of the existing system and to prepare strategically for future industry and community needs.

Principles of Innovation Policy

It is widely accepted that innovation is the key to success for the modern economy. The OECD has estimated that innovation accounts for 50% of long term economic growth in advanced industrial countries. Innovation is the major determinant of enhanced productivity and competitive advantage at both the firm and nation level.


Innovation can be defined as applying new ideas to products, processes, services, organisation, management or marketing. But newness by itself is invention – it only becomes innovation when it yields market value.

Innovation policy first emerged as a concept towards the end of the 1970s. Early models tended to stress innovation as a simple linear sequential process with R&D playing either an initiating (technology push) role, or a reactive (market pull) role. More recent analysis has stressed that innovation involves much more than R&D – such as the integration between R&D, manufacturing and marketing inputs, the importance of strong linkages with suppliers and leading edge customers, and the use of collaborative research and marketing arrangements.

Successful innovation requires:

  • a good working interaction between the science base and the business sector
  • competitive markets to force firms to innovate more rapidly
  • networking and collaboration between firms
  • an education system that underpins an innovation culture and promotes linkages between the research and industry sectors
  • a strong and reliable system for the protection of intellectual property rights.

Within our innovation system there are many players involving complex interactions between business, researchers in bodies such as CSIRO and in the higher education sector, financiers and customers. The key to performance is the linkages and communications between them.

A properly structured innovation policy should:

  • be integrated into economic and industry policy
  • be implemented as part of a whole of government approach – across Commonwealth and state jurisdictions
  • recognise the special needs of small and medium enterprises
  • incorporate public funding of R&D in universities and research institutions which recognise both the importance of industry focused applied research and the need for general ‘pure’ research
  • emphasise co-operative approaches
  • develop human capital through education and training
  • increase ‘user’ input into evaluation processes of government programs
  • include means to measure and benchmark innovation
  • ensure that government assistance is defined by innovation activity not by business characteristic or market. Innovation assistance should be open to all business irrespective of size, sector, location, export focus etc.

Policy Objectives

The overall objective of innovation policy should be to improve Australians’ quality of life and standards of living. These benefits flow from improvements in the range, quality and cost of existing goods and services, and from the development of new products and services. This requires a policy framework which ensures the Australian businesses are not impeded in their search for innovation which improves competitiveness, quality and service and provides appropriate government support for research and networking activities which yield benefits to the community but which businesses might not be willing or able to undertake.

To underpin innovation a proper system of legal protections for intellectual property rights is necessary as is removing barriers to the international and national flow of ideas, technology and people, except for such restrictions as are deemed to yield a net benefit to the Australian community.

Innovation policy should focus primarily on creating an environment in which new ideas are generated and translated into new products, services and processes by the private sector.

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About the Author

Karen Curtis is Director of Industry Policy at the Australian Chamber of Commerce and Industry.

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