Policy buzzwords: Innovation

For a number of years I've been working on various policies and projects that are directly or indirectly focused on innovation and productivity. Yesterday I went to a conference where two Australian academics with extensive international experience, Roy Green and Jonathan West, spoke. Here's a few key points that I took from their presentations:

• Innovation is not concentrated in any one specific industry but is concentrated within only a handful of firms within any one industry
• Major impediment to innovation is the management of risk, therefore only large companies or major financial institutions are able to pay for innovation (and generally capture the benefits of it, compared with those that actually have the ideas)
• Because of this, Ireland have systematically developed domestic investment capability/instruments to offset the risk of a major decline in foreign direct investment funds e.g. Enterprise Ireland
• Australia has the fourth largest private investment funds but less than 1% is invested in technology stocks - primarily because the large super funds prefer blue chip stocks over riskier investments
• In manufacturing, companies that have low staff turnover tend to be the most innovative - Japanese companies particularly exhibit this characteristic and, against global trends, have increasingly stable workforces (note that the Australian workforce is one of the most casualised according to most commentators)
• Innovation has not created thousands and thousands of jobs, it's probably deleted them, a classic case study is the impact of online banking on employment in the banking sector

Food for thought. Papers from the conference will be online here.