Financing Innovation: Viewing the UK from a global perspective
Transcript of a talk by Professor Michael Mainelli, AEA & Wolfson College Seminar, 8 February 2010
Outline
Well, as we say in Commerce – ‘To Business’.
Tonight’s discussion is about funding innovation. Annual, global investment in technology is enormous. Research & Development (R&D) alone is 1% to 3% of GDP in OECD countries, approximately £275 billion in the 1,400 largest multi-nationals and uncounted billions in small organisations. Without technological change, advancement in productivity and therefore GDP would be limited to increasing labour and material productivity, finite sources of improvement. In the words of Michael E Porter ‘Innovation is the central issue in economic prosperity’.
The compelling argument that improving living standards requires improved technology makes governments, universities, research establishments, think tanks and even trade unions talk confidently about turning nations into ‘knowledge economies’. And, clearly, given the focus on innovation by Government, the media and business, we want more of it.
In many ways, innovation bears hallmarks of religious fervour. If your faith in innovation is strong enough, you will prevail. If you fail, you need more innovation. Tonight, I intend to explore three observations on innovation:
1. A diverse, competitive ecosystem generates innovation.
2. Government can’t direct innovation.
3. Government policy should focus on education and diversity, with low risk and high rewards for entrepreneurs.
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