Launch of the OECD’s Innovation Strategy


Remarks by Angel Gurría, OECD Secretary-General

OECD Conference Center
27 May, 2010

Minister O’Keeffe, dear friends from the media, Ladies and Gentlemen, good morning:

Thank you for being here. This is an important moment for the OECD. The launch of our Innovation Strategy is a landmark in the history of this Organisation. Today we are presenting a policy tool that will help countries build a sustainable and job-rich recovery and move on to the next phase of human progress: the era of green growth.

It is a great pleasure to be presenting this Report with Mr. Batt O’Keefe, Minister of Enterprise, Trade and Innovation of Ireland. Ireland is making great efforts to become a global innovation hub. Its perspective will certainly enrich this presentation.

The OECD’s Innovation Strategy was launched in 2007. Tomorrow, we will formally present the results of this work to our Ministers. But we wanted to take this opportunity to share this presentation with all of you, our media partners.

I will talk about the Innovation Strategy in more detail, but first let me very briefly tell you why we think innovation is so crucial to our economic recovery, and to building a sustainable growth.

1. Innovation is essential to find new sources of growth

The world economy is still confronting very delicate challenges. The financial and economic crisis that is coming to an end has left deep scars in our economies. Recovery is underway, but countries now have to face new complexities.

To name but a few; exit strategies and fiscal consolidation in times of weak growth, spending cuts with record unemployment levels, industrial reactivation while seeking to cut down emissions of CO2, promoting world trade and investment flows while trying to keep jobs at home.

The only way to address these delicate trade-offs and build a stronger, cleaner and fairer world economy, is to develop new sources of growth. Innovation, in its broadest, most far-reaching sense, stands out as one of the most efficient ways to do so.

Innovation has always been an important driver of growth. However, in recent times, its importance has grown significantly. More than ever, we need to reboot our economies with a more intelligent type of growth, driven by new start-ups, by the most innovative small and medium enterprises and banks, and by our need to develop efficient renewable energies and green technologies for a low-carbon era.

2. Recessions are fertile ground for innovation

Our analysis shows that recessions can be a breeding ground for innovation activities and entrepreneurship, generating new sources of growth.

Companies like Microsoft, Nokia, Google, Blackberry (RIM) were all born, or reborn, during an economic downturn. In fact, over half of the companies on the 2009 Fortune 500 list began during a recession or bear market.

Firms based on constant innovation can also become “life-saviours” in times of economic depression and serve as “fast-start engines” during recovery. Both Apple and Amazon, for example, reported the best earnings in their company history of the companies during the 3rd quarter of 2009.

How did they do it? By extracting value from innovations such as the iPhone and cloud computing, which are transforming these two companies; but also boosting the creativity of many people, and the productivity of many firms.

3. So the crisis should not lead us to cut on innovation, on the contrary

The importance of innovation as a driver of growth was recognised in many of the stimulus packages that were launched to offset the impact of the crisis. Many countries increased their public investment in education, research and smart infrastructure to strengthen their growth performance. But now, with the weight of fiscal deficits, there is a risk of such spending being cut. This would be a mistake.

While cuts may provide short-term fiscal relief, it will hurt growth in the long term, not to mention the ability to deal with challenges such as climate change, hunger and disease; all of which require innovative solutions.

But this is not just about spending.

4. Our understanding of innovation is also crucial

The nature of innovation has changed dramatically over the past decade due to globalisation; to the emergence of new players like China and India; to the widespread diffusion of information and communication technologies (ICTs); and to competitive pressures to engage in more “open” innovating methods.

On top of this, the crisis represents a paradox for the innovation system as it creates an opportunity for innovation through “creative destruction”, while at the same time eroding the capacity of the system of innovation to deliver, as aversion to risk grows and public debt mounts. 

Individually, any of these changes marks an important shift; collectively, these changes have transformed the nature of innovation – how it is performed, where it occurs, who does it and what it consists of. 
In light of these changes,

5. We need to rethink our policies designed to nurture and guide innovation

We need to rethink, for example, the role that universities and public research organisations play in our economies. We need to view them as essential nodes in the innovation system, grant them more freedom and independence, and encourage them to compete and become world class innovation catalysts.

We need to see innovation as a system. Our innovation policies must have a broader view than simply supporting science and technology (S&T). Countries need whole-of-government innovation strategies, capable of aligning the different Ministries, policies and reforms around a nation-wide “innovation crusade”.

We need to promote entrepreneurship and support the creativity of young innovative firms ─ the so called “gazelles”. These firms tend to be the source of radically new, “disruptive innovations”. They also tend to generate large productivity and employment gains: according to new data from the US, firms less than five years old accounted for nearly all increased employment in the private business sector over the last 25 years. 

In this complex context of crisis and change, governments need support to build a coherent, far reaching and successful innovation policy. We hope that the package that you have in your hands will provide that support.

6. The OECD’s Innovation Strategy is…

one of the first, whole-of-government exercises that seeks to look at “innovation” not from the narrow lens of just S&T, but more broadly from a wide expanse of policy areas.

It is built around five priorities for government action: 1) Empowering people to innovate; 2) Unleashing innovation in firms; 3) Creating and applying knowledge; 4) Applying innovation to address global and social challenges; and 5) Improving the governance of policies for innovation.

It advocates an approach which takes into account the interplay of different policy domains and brings them together through supportive mechanisms for governance, highlighting experiences and good practices from countries around the world.

We very much hope that its findings and recommendations reach as many countries as possible. And we count on your help to reach that far.

Mr. Andrew Wyckoff, our Director for Science, Technology and Industry, whose Directorate is the leading force behind this initiative, is here with us in case you have more detailed questions.