When money isn’t enough

Nuala Moran

Japan is the third highest spender on R&D in the OECD area. But the benefits do not appear to be commensurate with the level of investment, according to a report from the OECD’s Economics Department by Randall S. Jones and Tadashi Yokoyama entitled, “Upgrading Japan’s innovation system to sustain economic growth”.

At the height of its technological and prowess in the 1980s and early 1990s Japan was often criticised for being imitative rather innovative. At the time this seemed like irrelevant sour grapes, given the commercial success of the country’s leading companies. But now the OECD report says the fact that Japan’s innovation system remains largely input-driven and focused on incremental innovation based on closed and stable corporate and employment systems puts it at a disadvantage.

Take the risk

The authors argue this approach is less appropriate in the current global environment that favours risk-taking and a more open system relying on external links. According to the authors, education and public research in Japan needs to be upgraded through stronger competition, and the effectiveness of science and technology policy increased by tying it more closely to economic policy.

Now, basic research tends to be outsourced to universities and external research organisations with specialised expertise, while start-up companies play an increasingly important role in high risk investment. The importance of company-specific knowledge and experience accumulated and shared internally is being replaced by more specialised, open networks and collaborations with university partners and joint ventures with commercial counterparts, both local and foreign, and large and small.

The good news is that many at the European Commission and in national governments recognise the need to remove barriers to innovation – such as the continent’s hideously complex patent system, its crazy-quilt of conflicting investment-tax policies, and its fossilized rules on hiring, firing and transferring doctors, lawyers, professors and other professionals. The bad news is that, based on the early plans from the German presidency that started 1 January, they aren’t actually going to succeed in doing much about it.

Instead, it looks for the moment like the EU will simply set about spending the money authorised at the close of 2006 – on its new European Research Council, its new Joint Technology Initiatives, and a grab bag of other clever new ways to support research. It might do well to spare a few euros on buying some copies of the OECD report.