Innovation is Critical to Economic Recovery: OECD

14 July 2010

Innovation and coherence in policy interventions can spur economic recovery and address global challenges such as climate change, according to the recently released "OECD Innovation Strategy" report. The main findings of the report were presented in Geneva on Tuesday by Andrew Wyckoff, the Organisation for Economic Co-operation and Development's Director of Science, in a panel discussion.

Wyckoff emphasised that the report aims to disclose the complexities of innovation and provide policy makers with strategic priorities and policy advice to better encourage innovation and promote economic growth. One of the report's key messages is that innovation policies should encompass a wide range of activities in addition to the standard research and development (R&D). Other critical areas include design, marketing and organisational changes. Consequently, innovation should be addressed and encouraged in an increasingly horizontal approach, through a wide spectre of policies, the report concluded.

The report urges governments to make long-term investments in education, research and knowledge infrastructure. At the same, it notes that governments should fuel demand-side policies such as smart regulations, consumer education and public procurement. To encourage green technology for example, governments should not only fund research, but also use public procurement rules that favour environmentally friendly products and technology.

According to the report, just 700 firms account for close to half of the world's total R&D expenditure. The OECD stressed that improved mechanisms for technology transfer, including the removal of trade barriers that limit technology transfer, and the development of knowledge markets (e.g. voluntary patent pools) is called for to address this imbalance and encourage innovation in developing countries. The report noted that new global players such as China, Brazil, and India are being increasingly active on the innovation front.

The report also found that weak protection of intellectual property rights (IPRs) undermines incentives to invest in innovation, while excessively strong IPRs can hamper access to technology and discourage research.

James Pooley, Deputy Director General of the World Intellectual Property Organization, stressed that IPRs - "the package in which technology travels," as he put it - are essential for the commercialisation of innovation.

Pedro Roffe - a Senior Fellow at the International Centre for Trade and Sustainable Development, which is the publisher of Bridges Weekly - indicated that developing countries could draw lessons from the OECD experience in this area, while taking into consideration their own circumstances. He emphasised the need for balanced IP protection that is combined with policies and mechanisms to facilitate access to and the transfer of technology. He stressed the importance of advancing IP policymaking on the basis of empirical evidence. Roffe also made reference to bilateral agreements in which OECD countries have exported their strong IP standards to poorer nations, which may not be equipped with the same checks and balances.

The report was first presented at an OECD ministerial meeting last month. It reflects the growing recognition of the role of innovation in meeting development goals and in offering solutions to key public policy challenges such as food security, climate change and health needs of the poor. Innovation has been high on the agenda of several international organisations and processes in recent years, including the World Health Organization, the World Bank and the UN Conference on Trade and Development, as well as WIPO and the OECD.

ICTSD reporting.

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