OECD Ministerial on Innovation Policy - Gets it wrong

Sorry Andy (Wyckoff) but this latest document from the OECD just gets it wrong.


OECD INNOVATION STRATEGY 2015 AN AGENDA FOR POLICY ACTION
Meeting of the OECD Council at Ministerial Level Paris, 3-4 June 2015

I assume that member country Governments had a big say in this document.

a quick overview.

(p2) New sources of growth are urgently needed to help the world move to a stronger, more inclusive and sustainable growth path following the financial crisis. Innovation – which involves the creation and diffusion of new products, processes and methods – can be a critical part of the solution. While not a goal in itself, innovation provides the foundation for new businesses, new jobs and productivity growth and is thus an important driver of economic growth and development....

Governments play a key role in fostering a sound environment for innovation, in investing in the foundations for innovation, in helping overcome certain barriers to innovation, and in ensuring that innovation contributes to key goals of public policy. The OECD Innovation Strategy 2015 sets out a concrete agenda to strengthen innovation performance and put it to use for stronger, greener and more inclusive growth. The Strategy sets out 5 priorities for policy makers that together provide the basis for a comprehensive and action-oriented approach to innovation, much of which can also be applied in the context of fiscally constrained economies. These priorities are: 

1. Strengthen investment in innovation and foster business dynamism
2. Invest in and shape an efficient system of knowledge creation and diffusion
3. Seize the benefits of the digital economy
4. Foster talent and skills and optimise their use
5. Improve the governance and implementation of policies for innovation

(p7) OECD analysis suggests that innovation thrives in an environment characterised by
the following features, all of which are explored in detail in the OECD Innovation Strategy 2015:

• A skilled workforce that can generate new ideas and technologies, bring them to the market implement them in the workplace, and that is able to adapt to technological and structural changes across society.

• A sound business environment that encourages investment in technology and in knowledge-based capital, that enables innovative firms to experiment with new ideas, technologies and business models, and that helps them to grow, increase their market share and reach scale.

• A strong and efficient system for knowledge creation and diffusion, that invests in the systematic pursuit of fundamental knowledge, and that diffuses this knowledge throughout society through a range of mechanisms, including human resources, technology transfer and the establishment of knowledge markets.

• Policies that encourage innovation and entrepreneurial activity. More specific innovation policies are often needed to tackle a range of barriers to innovation. Many of these actions include policies at the regional or local level. Moreover, well-informed, engaged and skilled consumers are increasingly important for innovation.

• A strong focus on governance and implementation. The impact of policies for innovation depends heavily on their governance and implementation, including the trust in government action and the commitment to learn from experience. Evaluation of policies needs to be embedded into the process, and should not be an afterthought.

(p7ff)
Priority 1: Strengthen investment in innovation and foster business dynamism ... Structural reforms in product, labour, and financial markets are important to get the most out of investment in KBC, by enabling resources – capital and labour – to flow to the most productive, often KBC-intensive, firms ...Priority 2: Invest in and shape an efficient system of knowledge creation and diffusion
Government plays a critical role in providing some of the foundations for innovation. New 

OECD research shows that basic research, in particular, drives long-run productivity growth by enhancing 

the mobility of economies to learn from innovations at the global frontier (OECD, 2015c). Public funding 

is needed to address the inherent under-investment in basic research of private firms, linked to the large 

knowledge spillovers of such research ...

Priority 3: Seize the benefits of the digital economy
Priority 4: Foster talent and skills and optimise their use
Education and training systems are core to innovation and productivity, including in realising the benefits of the next production revolution (OECD, 2015a). However, OECD assessments show that on 

average, only one-third of all adults have the skills necessary for a technology-rich environment (i.e. levels 

2 or 3 in the OECD Survey of Adult Skills, see Figure 8). Many disciplines are relevant, as are broader 

competences such as creativity and critical thinking. A key principle should be the creation of an 

environment that enables individuals to choose and acquire appropriate skills and supports the optimal use 

of these skills at work

Priority 5: Improve the governance and implementation of policies for innovation
To be effective, innovation policies and the related governance system need to be adapted to the specific challenges faced by each country. Countries differ considerably in their basic conditions for innovation, such as the level of economic development, the structural make-up and trade  specialisation of 

the economy, as well geography. They also differ in their institutional characteristics and approaches to 

policy, e.g. as regards the role of government and different private and public actors in the economy. As a 

result, policy needs and policy agendas will differ across countries and specific challenges.

So lets summarise.

1. deregulate labour markets and financial markets etc to increase productivity.

2. invest in basic research

3. invest in broadband but watch the downsides of privacy, oh and "Promoting a culture of digital risk management across society" which is the least scary possible way of saying cybersecurity - which it happens is basically the No 2 reason for a lack of investment in the digital economy in Canada.

4. invest in education 

5 improve governance and evaluation.

This is a doing nothing different strategy.

Nothing here about:

1. digital companies avoiding tax;

2. digital technologies and companies creating significant disruption to regulated industries from bitcoin to Uber and creating massive levels of precarious employment;

3. reforming market shaping policies such as carbon pricing, energy buying practices (micro-energy generation) etc;

4. massive technological change that is now changing industries - autonomous vehicles (the ones already operating), e-commerce delayering retail etc etc;

5. you can't create policy without measuring the right things and currently we we are getting further from that than ever.

The big challenges - meaningful job creation and sustainability and understanding the velocity of change - when to act and when to hold off.