The Covid-19 pandemic has had a significant impact on the world economy, with estimates from the International Monetary Fund indicating that the entire cost will likely exceed US$12.5 trillion. The crisis has also expedited the adoption of new technology as well as significant changes in how we live and work. In order to spur economic recovery, policymakers and leaders in science and industry are resting their hopes on more innovation.
Though encouraging innovation is a wonderful idea, it is not always simple. I have researched global efforts to promote local innovation throughout the last century and have identified six major strategies, each of which has advantages and disadvantages. This is the creation of specialised high-tech hubs or clusters (think the next Silicon Valley). High-tech clusters are clearly essential for a country’s competitiveness, according to solid data.
Cities and industrial clusters more broadly are hubs for new business creation, productivity, skill development, and innovation. Clusters help businesses cooperate and compete with one another, create regional brands like watches from Geneva or suits from Savile Row, and establish local supply chains.
With the help of public research institutions, the development of science and technology parks, or the provision of financial and other incentives, numerous governments have attempted to build these clusters from the ground up. Few of these attempts have been successful.
Accelerating established or developing industry clusters has had more success. In addition to being extremely expensive, creating new industry clusters might take decades to pay off.
This strategy aims to improve lifestyle, culture, and public amenities in order to create an inventive, entrepreneurial environment. It aims to develop a “people environment” where locals may build, build, share information, and collaborate creatively. Additionally, it need to draw in and keep the next generation of educated, creative, and wealthy individuals. This method has been used in urban revitalization efforts all around the world. These initiatives transform inner-city and downtown neighborhoods into hip and trendy settings that promote chance encounters, casual talks, and group learning.
However, improving one’s lifestyle does not always result in increased inventiveness. Rapid gentrification that drives out creative populations that can no longer afford the escalating rents can result from it. Increasing the local level of valuable talents is another approach to foster creativity. This might be accomplished by luring in skilled immigrants or educating the local populace.
People are mobile, which makes relying solely on talents problematic. If they aren’t given continued possibilities or if the financial, lifestyle, or creative incentives are higher elsewhere, skilled people will quit. The race to find highly educated or skilled individuals with a track record of developing profitable businesses or goods is heating up on a global scale.
However, when used in conjunction with the “triple helix model,” which unites research, government, and industry, skills-led approaches to innovation can be extremely effective. The matching of skill development with regional opportunity is crucial. The mission-based strategy combines resources and expertise from the public and private sectors to address a medium- to long-term problem. The US moonshot, a 1961 project to send a person to the Moon and back by 1970, is the most well-known example.
The moonshot was supported by NASA during the course of three presidents. The mission was successful, and various new technologies and products were created as a result.
“Mission statements” have since gained popularity in both industry and government. Missions and targets are used by governments and non-governmental organisations (NGOs) to motivate action on a variety of issues, such as net-zero commitments, the UN Sustainable Development Goals, and the need to create vaccinations for global pandemics in less than 100 days. Missions, however, may encounter difficulties due to a lack of continued funding, imprecise objectives, opposing interests, and the emergence of unforeseen consequences. Missions may also take funds away from “blue sky” research motivated by curiosity, which has produced some of history’s most important scientific discoveries.
Increased financing for R&D, universities, other research organizations, and commercializing breakthrough technology is essential for fostering innovation. However, the connection between more funding and more innovation is nuanced.
Spending on innovation may become less effective as nations develop. Once the first benefits of using existing technologies have been realised, additional advancements can only come from the more costly and dangerous processes associated with developing and commercialising new technology.
This is profitable for nations with sizable markets and high levels of current productivity, but it is challenging for other nations. The venture financing that enables many fledgling businesses to grow quickly is heavily regionalized. Additionally, venture capital frequently concentrates on a small number of areas, such as the pharmaceutical and information technology sectors.
This strategy makes use of public investment to give emerging technologies like robotics, AI, blockchain, and drones a purpose and funding. Governments can benefit from early engagement with creative local businesses by enhancing their capacities and co-developing technology applications. Government receives more contemporary services, and business has a sizable customer base.
Some of the biggest and most prosperous innovation hubs in the world, including Silicon Valley, have been created using this strategy. The drawbacks of this strategy include the potential for wasting money intended for other government initiatives, the potential for public humiliation when things go wrong, and the dependence on the ability of the government to critically evaluate emerging technologies. Building prosperous, creative neighbourhoods at the local level is essential for strengthening and expanding the country’s economy. None of these six strategies by itself will serve as a “miracle cure” for innovation and economic growth.
What then will be effective? balancing all of these strategies while paying great attention to local contexts, combining and matching for local situations, and concentrating on overall national productivity, technological advancement, and future markets.
