Innovation plays a critical role in strengthening Australia's economy and global competiveness, as identified in a recent overview of Australia's economy by Michael Enright and Richard Petty titled Australia's Competitiveness: From Lucky Country to Competitive Country.1
Innovation facilitates growth in productivity, market diversity, exports and employment and, as such, there are significant benefits to business, the economy and ultimately society if a culture of innovation is pursued. Innovation also provides increased resilience to changing business and economic conditions.
Significantly however, whilst Australia may consider itself the 'lucky country', it is far from a leader in terms of innovation.
Importance of the Knowledge-Innovation Economy
The authors discuss the idea that the prosperity of a country is closely linked to the development and strength of its knowledge-innovation economy. The knowledge-innovation economy is largely defined by the participation of high-technology industries and R&D activities. Innovation in business systems, business standards, training and marketplace development are also considered to fall within the scope of the knowledge-innovation economy.
A knowledge-innovation economy is largely enabled by a highly developed education and research system, a talented workforce and by opportunities to commercialise innovation that stems from these systems. The accessibility to key markets and information sources are also vital for the success of a knowledge-innovation economy and the strengthening of linkages between industry and universities help to further promote intellectual capital in order to generate competitive growth.
Australia Lagging in Innovation
With respect to innovation, Australia falls outside the top 10 globally recognised leaders in this area, as demonstrated in a recent study conducted by Cornell University, INSEAD and the World Intellectual Property Organisation (WIPO).2 The study, which ranks Australia as 19th in the world, measures, amongst other factors, the enabling environment to innovate along with the number of innovation outputs of each country studied. Australia's arguably poor ranking poses a challenge for policy makers and business leaders with respect to developing innovation to bolster competitiveness.
Efforts to improve Australia's global competiveness, through innovation and productivity, have been at the forefront of government policies for many years. Limited access to skilled labour and a shortage of additional funds remain the two most commonly perceived external barriers to innovation. An educated and skilled workforce is essential for successful innovation because such a workforce is more likely to be able to generate and implement new ideas and be flexible to changes in technology and business climate.
Need to Address Global Market Needs
Additionally, for innovation to thrive in Australia, new knowledge and new ideas must address global market needs. This sentiment is supported by the Australian Industry Group, who has called for a shift towards innovation that is market driven as opposed to purely research based.3
The need to enhance commercialisation and the need to provide incentives to innovate have also been identified as important issues that must be addressed to ensure Australia's competiveness. Finally, the role that networked innovation (whereby business and firms seek external sources of knowledge, often from the public knowledge bases and through formal collaboration) is seen as being an essential component to strengthen Australia's innovative capacity and ultimately competiveness.
Rise of China & India
The rise of China, India and the other powerhouse economies of Asia presents economic and cultural opportunities for Australia. Many consider that these Asian economies will be crucial in developing Australia's innovation driven economy. In particular, close proximity to these booming Asian markets should open up avenues to attract and retain major investment opportunities. As such, there is clear scope in Australia's future to strengthen its innovation systems by tapping into these fast emerging markets.
Australia's competiveness will not only involve the funding of research and commercialisation of the products that stem from it, but it must also involve a critical mass of business enterprises and workplaces consistently innovating. This innovation cannot only relate to next generation products, inventions and technologies, but must extend to their operations, organisation, relationships and business models.
The authors conclude that it will be a deep seated innovation culture that will steer Australia towards being a known leader in innovation and competiveness. Whether the political, economic and social environment in Australia can achieve this going forward remains to be seen.