The Global Tour of Innovation Policy: Introduction

Innovation does not take place in a laboratory.

It occurs in a complex web of activities that transpire in board rooms and court rooms, in universities and coffee shops, on Wall St. and on Main St., and it is propelled by history, culture, and national aspirations. Innovation must be understood as an ecosystem. In the natural world life might begin from a tiny cell, but to grow and prosper into a mature organism, that cell needs to be supported, nurtured, and protected in a variety of ways. Likewise, the germ for an innovation can appear anywhere, but it will mature into a real innovation only if it can grow in a supportive social ecosystem.

The idea of an innovation ecosystem builds on the concept of a National Innovation System (NIS) popularized by Columbia University economist Richard Nelson, who describes an NIS as “a set of institutions whose interactions determine the innovative performance… of national firms.” Too often, unfortunately, analysts and policymakers perceive the NIS as the immutable outcome of large historical and cultural forces. And although there is no doubt that these large forces powerfully shape an NIS, many aspects of an NIS can be recast with deliberate action.

Among the essential components of an NIS are social norms and value systems, especially those concerning attitudes toward failure, social mobility, and entrepreneurship, and these cannot be changed quickly or easily—but they can change. Other critical components are clearly conscious human creations and are obviously subject to change; these include rules that protect intellectual property and the regulations and incentives that structure capital, labor, financial, and consumer markets. Public policy can improve innovation-led growth by strengthening links within the system. Intermediating institutions, such as public-private partnerships, can play a key role in this regard by aligning the actions of key players in the system such as universities, laboratories, and large companies, in conjunction with the self-interest of venture capitalists, entrepreneurs, and other participants with national objectives. Some systems underemphasize the role of the public sector in providing R&D funds and support for commercialization activities; other systems sometimes overlook the framework conditions required to encourage risk, mitigate failure, and reward success.

Paradoxically, international cooperation is a hallmark of scientific progress, technology development, and the production of final goods. At the same time, there is fierce international competition for the growth industries of the future with the jobs, new opportunities, and synergies that high-tech industries bring to a national economy. In the past, many nations believed that their innovation systems were largely immutable, reflecting distinct national traditions. The winds of globalization have changed that perspective. The articles that follow describe the efforts of a handful of nations to deliberately shape their NIS. They are all works in progress that illustrate that there is no perfect innovation ecosystem. Each country is struggling to determine what can be changed and what must be accommodated in its particular circumstances. What works in one context will not necessarily work in another. What works in one decade will not necessarily work in the next. And with the global economic systems always in flux, every country must be ready to reexamine and revise its policies. These articles contain no easy answers. They offer something much more useful: candid and perceptive discussion of the successes and failures that are slowly leading all of us to a better understanding of how innovation can be tapped and directed to achieve human goals.

This collection of articles is an outgrowth of the Board on Science, Technology, and Economic Policy’s project on Comparative Innovation Policy: Best Practice for the 21st Century, which is an effort to better understand what leading countries and regions around the world are doing to enhance the operation of their innovation systems. The project’s publications include Innovation Policies for the 21st Century; India’s Changing Innovation System: Achievements, Challenges, and Opportunities for Cooperation; Innovative Flanders: Synergies in Regional and National Innovation Policies in the Global Economy; and Creating 21st Century Innovation Systems in Japan and the United States: Lessons from a Decade of Change.