Myths, crises and complacency: innovation policy in the United States and Australia

19 Dec 2018

In an era of rapid and potentially disruptive change, an economy’s capacity to develop new enterprises and areas of specialisation is increasingly important. Given that innovation and entrepreneurship are so essential, what roles can, and perhaps should, government organisations and programs have in supporting them?

Although Australia’s research system is strong, its performance in innovation and commercialisation is not. Nor has innovation policy been effective in driving sustained improvement.

The United States also has a strong research system, but also a strong innovation system with more effective commercialisation. US programs and policies that support commercialisation and technology-based entrepreneurship have been increasingly strengthened over the past 50 years — often in response to perceived challenges to US technological leadership. The rise of Chinese firms and innovation capability is seen as a new challenge and has stimulated a new phase of policy review, debate and perhaps change. In the United States innovation performance matters.

The challenges for effective innovation and commercialisation policy in Australia are different from those in the United States in several respects:

  • Industry, research organisations and policy in Australia have been shaped by the earlier period of high protection and the high dependence on commodity exports.
  • Australia has a research system that produces high-quality research — but mostly in organisations weakly connected to industry. Hence, levels of collaboration between research and business for innovation are low.
  • The central innovation dynamic in Australian industry is technology absorption and adaptation for domestic markets. Australia is, in general, an innovation follower rather than a leader.
  • Australia is not a significant player at the international technology frontier and the “innovation system” has a low capacity to generate new areas of international specialisation.

In addition, conceptual lock-in and limited policy learning have contributed to a lack of policy innovation and effectiveness

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