Whats New in Australian Innovation:

1
Whats New in Australian Innovation First
Stage of the Australian Innovation Systems
Study Don Scott-Kemmis Director, Innovation
Management and Policy Program National Graduate
School of Management Australian National
University
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The Australian Innovation Systems Study

• Aims to identify and assess
• the characteristics, strengths and weaknesses of
  Australias national innovation system.
• the recent evolution of the Australian innovation
  system
• the impacts of structural change, government
  policy, technological change and globalisation.
• Supported by the
• Australian Research Council through the ARC
  Linkage Program
• Australian Business Foundation,
• Department of Industry, Tourism and Resources,
• Department of Agriculture, Fisheries and
  Forestry,
• National Office of the Information Economy
• CSIRO.
• A 3 year study- this paper reports on the main
  findings of the first year of the study. Other
  Working Papers from the study available on
  request.

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Innovation is

• pervasive across sectors,
• non-linear - only rarely driven directly by
  science and RD,
• usually incremental,
• sectorally specific,
• often characterised by collaboration and
  interaction,
• driven above all by technological competition
• non-RD aspects of innovation market research,
  training and competence building, design, etc
• Increasing systemness multi-actor,
  multicomponent, multitechnology and based on
  distributed learning

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Innovation Systems

• innovation is shaped by factors external to the
  firm eg institutional constraints, regulatory
  frameworks, nationally specific customs and
  habits, collaboration patterns, and processes of
  interactive learning
• firms, related organisations, competences and
  technologies co-evolve
• these and related phenomena are persistent over
  time and systemic in character path dependence
  
• innovation is learning, so the innovation system
  can be conceptualised as the institutions and
  organizations that shape learning and competence
  building
• many of these, even in the age of globalization,
  are national (or regional) in character and
  often the object of discretionary policy
  decisions
• The Innovation System shapes the direction and
  level of innovative effort, the response to major
  new technological and commercial changes and the
  roles of government actors.

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National Innovation Systems

• Key components include
• firms
• the education and training systems,
• knowledge infrastructures (universities, RD
  institutes, standards agencies, regulation
  systems, etc),
• physical infrastructures,
• public macro-micro policy systems.
• In the context of the historically evolved
  industrial structures, pattern of technological
  specialization, trade and investment structure.
• What really matters are the dynamic constraints
  and opportunities at any point in time .

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Innovation Systems Two Approaches

• National level innovation processes inputs and
  outputs. But how useful are traditional
  innovation indicators in the case of Australia?
• Actor-focused studies at the sectoral, regional
  or technology level. But very little such work
  has been done in Australia
• These approaches are complementary and
  inter-dependent

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Australia Dynamic and Structural Issues

•   Diversity- how to aggregate usefully?
• several cities distant from each other.
• temperate, tropical and semi-arid agriculture .
• Mining -coal, iron ore, gold, aluminium, silver,
  mineral sands, nickel, diamonds.
•   Historical legacy.
• Import substitution regime
• Missed the surge in manufacturing exports of the
  post-war years.
•   Industry structure.
• large resource sector
• small and shrinking manufacturing esp high
  tech
• large services sector
• Firm size.
• high proportion of small firms
• Trade.
• Low trade intensity
• Specialisation.
• low level of technological specialisation for a
  small economy

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Australia's Innovation Performance Compared to
OECD Average. How useful are these aggregates?
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The Laggard Perspective

• The Australian economy maintains a high level of
  dependence on natural resources and is failing to
  develop new areas of specialisation and growth.
• Recent productivity growth the result of
  one-offs micro-economic ICT
• This performance masks underlying weaknesses in
  new firm formation and in the growth of new
  internationally competitive industries.
• The poor performance of Australian firms in RD
  and patenting signals the weaknesses in
  management, scale and international positioning.
  
• Australias declining position in high tech
  sectors indicates the extent to which Australia
  is being left behind the frontier of innovation
  and growth in the world economy.
•       One of the lowest in the OECD in
• BERD
• investment in venture capital
• International patenting activity (per mill.
  Population)
• 80 of the top fifteen export products are
  resource-based commodities
• with a low level of processing
• large and growing trade deficit in ICT
  products and services

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The Boom Perspective

• Australia is a broadly based dynamic and flexible
  economy, diversified across markets, and
  increasingly sectors, underpinned by competitive
  domestic markets and flexible labour markets.
• High-level human resources and strong research
  organisations facilitate the rapid uptake of new
  knowledge produced anywhere.
• Imported knowledge and equipment combined with
  local knowledge and capability supports active
  problem solving and systems integration in a
  range of sectors generating relatively high
  levels of productivity.
• A fast-user strategy combined with natural and
  human resources is a sound basis for future
  prosperity.
• High and increasing productivity
• Relatively high level of public sector RD RD
  intensity in some sectors gt the OECD av.
• Substantial growth in niches markets in key
  manufacturing sectors telecom equipment, wine,
  boats, automobiles and components
• Maintaining strong competitiveness in resources
  sectors through the effective application of new
  technology, including IT
• A strong ICT services sector and high growth in
  knowledge based services
• Rapid and broadly-based uptake of new ICT.

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Characteristics of Australian Innovation-1

• Regional Differences
• and the Growing Role of ICT
• Services now gt50 of BERD and growing.

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Major industries (ANZSIC) engaged in RD, 2000-01
(GDP)
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Major RD fields of technological skills (RF),
2000-01 (GDP)
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Vic business Major RD technological skills
base (RF), 2000-01 (GDP)
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Qld business Major RD technological skills
base (RF), 2000-01 (GDP)
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Characteristics of Australian Innovation - 2

• Conservative
• Scientific strengths
• Technological specialisation
• Patenting behaviour
• Specialisation in export products
• Path Dependency
• Increasing returns

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Changes in revealed comparative advantage in
Australian scientific publications output in four
periods
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Science Linkage vs. Technology Cycle Time
(1980-2001)
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Revealed Comparative Advantage of Australias
Exports - selected commodities1971-80, 1981-90,
1991-2000
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Characteristics of Australian Innovation - 2

• Conservativeness in the Innovation System
• Summary
• Australia is specialised in sectors that are slow
  growing and have relatively low patenting levels.
  Over the past 20 years Australia has become
  relatively more specialised in these sectors.

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Characteristics of Australian Innovation

• Systems Integration Plus
• No core technology production
• Problem solving sophisticated but often unique
• Technology mobilisation for resource based
  industries and services
• ICT diffusion through the innovation system

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Some Policy Issues

• Avoid a high tech focus
• Recognise the role of dispersed innovation and
  problem solving- what are the drivers,
  capabilities, barriers
• In the context of small firms and limited
  capabilities strengthen the role of
  intermediaries in knowledge diffusion and
  capability development etc
• Demand side policies environment, health,
  security, energy, education. Leading edge
  problems to develop leading edge solutions.
• Services innovation What are the drivers,
  capabilities, barriers
• How do new capabilities, firms and sectors emerge
  and evolve over time in Australia? Greater
  policy research needed.

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Policy Analysis

• In the current AUSIS project work we are
  assessing innovation system problems at four
  levels.
• Capability failures
• Organisational failures
• Network failures
• Framework Institutional failures
• We are also assessing three dimensions of
  performance
• The generation and upgrading of resources (human
  resources, knowledge, networks, infrastructure)
• Effective problem solving mobilising resources
  to address challenges.
• Generation of diversity and options for future
  growth.