The Good, The Bad, and The Ugly (and The Self-Destructive) of Innovation Policy: A Policymaker’s Guide to Crafting Effective Innovation Policy
The Information Technology & Innovation Foundation, October 2010
107 Pages Posted: 12 Dec 2010
Date Written: October 7, 2010
Innovation has become the central driver of economic growth and thus a key focal point of countries’ economic development strategies as they seek to gain competitive advantage. Accordingly, countries are increasingly designing national innovation strategies that seek to coordinate their policies toward skills, scientific research, information and communications technologies (ICTs), tax, trade, intellectual property, government procurement, standards, and regulations in an integrated approach designed to drive economic growth through innovation. While a focus on innovation is positive, countries can implement policies that are either: "Good," benefiting the country and the world simultaneously; "Ugly," benefiting the country at the expense of other nations; "Bad" failing to benefit either the country or the world; or "Self-destructive," actually hurting the country while benefiting others.
Notwithstanding the fact that countries can readily implement a range of "Good" innovation policies, there remain far too "Ugly" and "Bad" (and occasionally "Self-destructive") mercantilist strategies that are neither sustainable nor productive. Moreover, these Ugly, Bad, and Self-destructive mercantilist strategies suffer from three other failures. They: 1) undermine confidence in the international trading system, while reducing global GDP growth; 2) fail to recognize that neither the United States nor Europe - nor even both combined - can indefinitely absorb imports if Brazil, China, India, Japan, Russia, and others continue to promote exports while limiting imports as their primary path to prosperity; and 3) ignore that raising the productivity across-the-board of all sectors, traded and non-traded, is the surer path to lasting economic growth.
Keywords: innovation, globalization, trade, taxes, information technology, intellectual property, government procurement, standards, regulations, policy, economics
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