Policy Brief: Innovation and Growth

Innovation is a major factor of economic growth and performance in the globalised economy. Innovation brings new technologies and new products that help address global challenges such as health or the environment. New ways of producing goods and delivering services boost productivity, create jobs and can help improve citizens’ quality of life.
But for innovation to provide all these benefits, it has to work. Researchers can push the frontiers of knowledge, but that in itself is not enough. We need systems to ensure that the results of that research are used to make a new piece of medical equipment, a safer lift shaft, or a more secure database – in other words, that research reaches the businesses and people that can make use of it.

And governments need to adopt policies that will encourage innovation and help ensure that it is given the best chance to develop into new products and processes.

Investment in new knowledge, notably in research and development (R&D), which provides the building blocks of innovation, is already growing in line with gross domestic product. At the same time, skilled workers, needed to help develop and implement innovation in industry and society, make up an increasing share of the labour force, notably in the services industries.

Governments are meanwhile reorienting their innovation policies away from subsidising and buying research to alternative instruments such as tax relief on R&D and reinforcing the links between industry and public research organisations to ensure that science is put to good use.

This Policy Brief looks at the growing role of innovation in economic and social development, and how governments can help ensure that innovation is translated into new products and techniques that can help society meet the global challenges of the 21st century.