We are more and more living in a world where evolution and changes become essentials to the growth of our economy. People make researches, create, develop, update, innovate and try to make more and more invention. But, unfortunately, inventions are not powerful enough to struggle strong competitive pressures from the globalisation. As the European Commission declares in its Innovation Union… Read more
We are more and more living in a world where evolution and changes become essentials to the growth of our economy. People make researches, create, develop, update, innovate and try to make more and more invention. But, unfortunately, inventions are not powerful enough to struggle strong competitive pressures from the globalisation. As the European Commission declares in its Innovation Union initiative, what Europe needs to ensure its economic growth is innovations in products, services and business models.
However, some people don’t really know what’s exactly an innovation. They are confused between invention, progress, innovation, updates… so it’s relevant to point out wrong ideas that peoples usually have over it and its creation to be able to erase it.
Indeed, Innovation is not something coming from nowhere that happen by chance but it’s the fruit of a lot of work, along with a favorable context and based on different people’s work. That’s why create an invention doesn’t mean it will turn into innovation, while an innovation is a successful invention. Hence, a study and creation of a appropriate context is critical; not only technical and organizational but also institutional and cultural.
Now it’s clarified, we can easily understand the weight the context can weigh in the success of an invention. As a project manager, you also have to realize the work process to create an innovation is long, so it’s primordial to pay attention on the environment of your company, keep your workers comfortable in a pleasant sphere, well analyse the market’s needs and keep a favorable political aspect; to ensure that your release on the market will flourish.
I fully agree with the idea of the intertwining of innovation with technological development, as is the proposition of the case presented. Nevertheless, and especially when it comes to what innovation can do to foster economic growth, I tend to assign it a broader role: effective generation of value-added through the creation of new products, processes, organization models, or means… Read more
I fully agree with the idea of the intertwining of innovation with technological development, as is the proposition of the case presented. Nevertheless, and especially when it comes to what innovation can do to foster economic growth, I tend to assign it a broader role: effective generation of value-added through the creation of new products, processes, organization models, or means of approaching the market (marketing).
The innovation is about making something different and out of the box in a much developed way and then produce and create value. Innovation allows us to live in a better way, more sustainable, healthier, enjoying the time available in a convenient and comfortable way… taking advantage of a more efficient use of resources. And that’s the essence of economic development, as the “science of economics” is about dealing with “scarcity”: providing ways for the humanity to generate and create more value with less resources.
To briefly illustrate with simple examples what, in my opinion, innovation can do, take McDonalds: through a brilliant and standardized process, they are able to provide and sell several meals per hour making those hours more profitable such as the work of the employees. Innovate in the organization; example: in older times, in a car plant there was a specialization of the work of the employees which was obviously not as effective as organizing the work per cells with employees of the company working together with external providers: more capacity with lower defects, ie. More quality and efficiency.
Another example on innovation through better organization models: the use of the internet allows us to communicate and work in a long distance which makes the work more profitable: more work, with more cooperation, and lower costs.
Of course innovation is an important and crucial factor to improve the economy of all over the world, but the question is: How to do it? How can we implement innovation in the economy field?
The European Union has created an asosiation named " Innovation Union " which purpose is to implement newer and grenner technology for create more jobs… Read more
Of course innovation is an important and crucial factor to improve the economy of all over the world, but the question is: How to do it? How can we implement innovation in the economy field?
The European Union has created an asosiation named ” Innovation Union ” which purpose is to implement newer and grenner technology for create more jobs and give to their citizens a better state of life. And how they’ll do it ? They are implementing new carreers in the best universities of Europe, they are introducing new topics in all the careers since the economy and market fields to the scientific and engineering ones. Also they create a program for exchange students for get more people from all over the world and they have new ideas of market wich is available in their page(1) and it has information of patents, of banks, of the alliances of the industry, etc.
This is one way to make a change in the European economy and that has make a difference now and will keep doing it as in the page says ” The Innovation Union is one of the seven flagship initiatives of the Europe 2020 strategy for smart, sustainable and inclusive growth”.
I also would like to share this news that I found in the page:
Wednesday, 01 October 2014
New pan-European pension fund to boost researcher mobility (via RAPID)
European Commission Press release Brussels, 1 October 2014 Mobility of researchers in Europe received a boost today with the launch of a consortium that aims to establish a new pan-European pension arrangement. Once put in place, the RESAVER initiative would mean that researchers could move freely without having to worry…
In 2008, Barak Obama and Joe Biden proposed a plan for science and innovation. The main features of this plan were: restoring integrity to US science policy, doubling over a 10 year period the federal investment in basic research, making a national commitment to science education and training, encouraging American innovation to flourish and addressing the big challenge of the… Read more
In 2008, Barak Obama and Joe Biden proposed a plan for science and innovation. The main features of this plan were: restoring integrity to US science policy, doubling over a 10 year period the federal investment in basic research, making a national commitment to science education and training, encouraging American innovation to flourish and addressing the big challenge of the 21st century.
I would like to focus on the second point: « the investment expansion in research and development ».
The plan on this investment engagement was to focus on two main actions:
a) Double the research budgets of the main science agencies over a decade (as the National Institutes of Health, the National Science Foundation, the Department of Energy’s Office of Science, and the National Institute of Standards and Technology).
b) Actively encourage multidisciplinary research and education.
Without considering the outcomes of this innovation plan, I think that these two key points are promising. It seems the US was under-investing in research although it’s an area which provides positive input to the economic growth as mention in the article.
Obama and Biden understood that this under-investing was unacceptable and aimed on the innovation and science aspect will drastically help to re build the economy.
First the first action: doubling the research budget will increase the human knowledge, offering better support for ‘high-risk, high-return’ research and will allow the next generation of scientists to focus their research on the “grand challenges” of the 21st century (energy, climate change, information technology, …). Unfortunately, most of the problems would be erased with financial solution, and regrettably, research and development is a horribly expensive field. If the support is bigger, fundraising wouldn’t block or delay innovations and wouldn’t discourage the scientist working on them (as it often happened in the past).
For the second action concerning the multidisciplinary research and education, it is again related to this 21st challenge.
We hear frequently that, innovation often arises from combining the point of views, data, techniques, and results from different fields. With all these new technologies and the new problems we are facing, on disciplinary cannot solve issues alone.
I believe that educating people and convincing them is one of the most important key point to focus on. As mention in different innovation management lectures (LLSMS20402042 – B.Gailly) concerning innovation, half of it is convincing people.
Therefore, educating people to mix disciplinary will allow a better understanding thus a better individual output, to eventually get a better help, support and approval for, as mention, the big challenge of 21st, the economic growth and futur issues which would be dealt with a great research, innovation and science background.
As mention again, my opinion doesn’t involve the outcomes of this plan but comment, as it would have been at the time. The key points sounds promising and the thinking put into it seems coherent.
This is well-known that innovation is the a key for the economic growth. Let analyze the last 10 years for a second, smartphones, internet (the cloud, social medias, download plateforms), advanced technologies in cars, house... All of this innovations have made our lifes easier, and lead us to the economic growth. Investing in R&D is essential to the survey of… Read more
This is well-known that innovation is the a key for the economic growth. Let analyze the last 10 years for a second, smartphones, internet (the cloud, social medias, download plateforms), advanced technologies in cars, house… All of this innovations have made our lifes easier, and lead us to the economic growth. Investing in R&D is essential to the survey of each technological firms in the world if they want to resist the constant evolution and stay at the top.
European leaders are correct when they say that Europe has to place innovation at the top of the agenda. In fact, globalization and stronger competition around the world must not weaken Europe. In other words, if European companies don’t take the lead of new innovative products, they will struggle to remain competitive.
But my point is that innovation is maybe important in an ageing population. But it will not resolve the unemployements problem. More than that, my point is that innovation is badly used. Indeed, most of the new technologies came out big firms labs and the profits of these techonologies are unequaly distributed. This lead to a gap between leaders of the firms and the population wasting its money to enjoy the revolutionary products.
As I said above, innovation in Europe is not a solution to the unemployments problems. As every body knows, the workforce in Europe is to expensive for the firms looking to produce their new technologies, so they are looking for other region of the globe where they can produce it at large scales and lower costs. In fact, the engineer and developers come from Europe but it is quite a small group.
As a conclusion I would say that Europe has to focus on Innovation but has to control it as well. If there is no control from them, European citizens are going to be more poor than ever.
I won’t discuss the connection between innovation and growth but a particular policy that is threatening innovation incentives and competition in the Internet setting. Throughout the last years, Net Neutrality (NN) has become a hot issue in American politics. Recently, the Federal Communications Commission has expressed its intentions to establish a two-speed network. Despite Barack Obama has vaguely supported the… Read more
I won’t discuss the connection between innovation and growth but a particular policy that is threatening innovation incentives and competition in the Internet setting. Throughout the last years, Net Neutrality (NN) has become a hot issue in American politics. Recently, the Federal Communications Commission has expressed its intentions to establish a two-speed network. Despite Barack Obama has vaguely supported the NN concept, he has not effectively provided a clear-cut definition of what NN means to him, and so I will defend that a “genuine” (e.g, non-Barack Obama) NN setting provides incentives for innovation and entrepreneurship.
Net Neutrality requires Internet Providers (IP) to offer identical quality of service to Content Producers (CP). Contrarily to this principle, both the US and UE are currently having debates on whether regulation should enable IPs to diversify their internet services -for instance, allowing IPs to create a premium service that provides a speed advantage over competitors. It is often argued that such a setting would incentive IPs to invest in new infrastructures. However, this system would undermine innovation and competition among CPs.
First, crucially, the end of Net Neutrality would lock small companies and start-ups out of the Internet provided these can’t afford extra fees for fast lanes. Therefore, creators in need of high bandwidth would never be able to compete with major, established companies in terms of service delivering. Secondly, IPs usually provide cable services, therefore, the latter would give an unfair competitive advantage over other content providers that don’t have their own infrastructure –for instance, think of Comcast versus Netflix or a new on-demand streaming service. Moreover, IPs would even have incentives to make the regular, no-premium lane even slower. Altogether, innovation in web-based companies would be harmed.
Finally, the potential incentive for IPs to create more efficient infrastructures is not that clear-cut. As said before, IPs may eventually create a slower lane as opposed to a fast lane –this is, IPs may just keep the current speed for premium companies. Having said that, the underlying need for a new setting that fosters further network development incentives is a rather strong assumption. On the one hand, US speeds are already growing at rates that would allow them to double every three years. On the other hand, current developments in IT let us think that web content is evolving towards a more efficient use of bandwidth –for instance, HTML5 or the creation of new video formatting.
All in all, I believe that Net Neutrality as defined above is a necessary condition for free competition and innovation incentives in the Internet. From my point of view, a two-tracked setting would strongly change the dynamism and struggle among web-based companies. Both US Government and the European Commission should have a more clear stand towards Net Neutrality.
In order to have a « clever growth », Europe has to be more effective in three areas : Education, Innovation and Numerical Society.
First of all Europe plans to create a digital strategy based on « high-speed » Internet (Numerical Society). I think it’s a good solution because Internet is a tool which could be a big source of… Read more
In order to have a « clever growth », Europe has to be more effective in three areas : Education, Innovation and Numerical Society.
First of all Europe plans to create a digital strategy based on « high-speed » Internet (Numerical Society). I think it’s a good solution because Internet is a tool which could be a big source of education. But be careful because it also can be a source of bad information and we have to teach people to well use it.
Secondly Europe has to invest in R&D and innovation. We demonstrated in our lessons the existence of a link between R&D and economic growth. We also know boosting economic growth is necessary to meet challenges of the financial crisis (higher unemployment, larger fiscal deficits,…) and the standing challenges (population ageing, climate change,…). However, we have to be careful because an increase of investment in R&D is not always synonymous of growth.
Finally, Europe has to help students to be more trained and equipping for the job market. For instance, to send students abroad is a great solution to adopt knowledge generated from other countries, culture and education. The best way to grow up is to open ourself to the world.
To conclude, I think innovation is one of the best growth strategy in a changing world in order to have a sustainable economy and I’m convinced Europe will meet most of its commitments for 2020
I think the link between Innovation and economic growth is clear for everyone. Therefore, I fully understand innovation as key focus topic for Europe 2020 strategy for growth and jobs. Nevertheless innovations need to be framed depending on the current global concerns they attempt to tackle to. Innovate with the only purpose of innovate, makes non-sense. It must address current… Read more
I think the link between Innovation and economic growth is clear for everyone. Therefore, I fully understand innovation as key focus topic for Europe 2020 strategy for growth and jobs. Nevertheless innovations need to be framed depending on the current global concerns they attempt to tackle to. Innovate with the only purpose of innovate, makes non-sense. It must address current challenges such as environmental concerns, providing employments, and economic recovery.
When we ask people what do they think about “innovation”, they have Samsung, Tesla, and other huge companies that come in their mind. However, those companies are usually not innovative. But they do enjoy from significant leveraging means and resources. For instance, the first “Ipod” has been invented few years ago from the French company Archos. They are the one who brought innovation in the music industry and offered a substitute to the Walkman and other portable music player devices. For many people, the “Ipod concept” comes from Apple, which is seen as a highly innovative company whereas they just took the innovative idea from someone else, designed their own device, and brought it into the market with a heavy marketing campaign under the lead of the charismatic Steve Job. And they did the same with the smartphone who existed a long time before the IPhones. There are plenty of such examples showing how huge firms, known as innovative, just picked existing inventions and after few modifications made a huge success out of it.
My point is: shall we give incentives to companies to innovate more and bear the risk that because a lack of resources the innovation may be stolen by a technological giant? Or shall we instead help smaller companies that do really innovate to implement and monitor their innovative idea till the end by providing them some support to launch the production and bring it on the market? I personally would opt for the second alternative.
According to me, innovate isn’t only a matter of idea. A successful innovation is a good idea combined with a capabilities and capacities. The trend is companies with capabilities and capacities acquiring ideas from smaller organizations not financially strong enough to lead the idea to implementation. Then innovation comes from giant such as Samsung, Apple, Google, … but those companies will not make things improve from an economical perspective. They are already so big that they do not hire anymore, they find all the subterfuges to pay less taxes as possible and finally participate less and less to the economy and to the society.
Therefore, I do believe that Europe 2020 strategy for growth and job should strongly focus on providing support to smaller entrepreneurs that come up with innovative and useful ideas, in order to help them to bring their own invention on the market under their names. Those smaller companies are the ones with the most promising growths; they are the best positioned to spot solutions to global concerns, they will participate to the economy and hire more people.
I focus on how the innovation impacts American economy.There has a long history of using the innovation to stimulate the development of economic in America.In 2009 ,Barack Obama refered the importance of innovation in his inaugural address.
For everywhere we look, there is work to be done. The state of the economy calls for action, bold and swift, and we will… Read more
I focus on how the innovation impacts American economy.There has a long history of using the innovation to stimulate the development of economic in America.In 2009 ,Barack Obama refered the importance of innovation in his inaugural address.
For everywhere we look, there is work to be done. The state of the economy calls for action, bold and swift, and we will act — not only to create new jobs, but to lay a new foundation for growth. We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together. We will restore science to its rightful place, and wield technology’s wonders to raise health care’s quality and lower its cost. We will harness the sun and the winds and the soil to fuel our cars and run our factories. And we will transform our schools and colleges and universities to meet the demands of a new age. All this we can do. All this we will do.
——President Barack Obama,January,20,2009
America’s development is inseparable from innovation.Before first industrial revolution,American real per capita income is only four percent of today,poor infrastructure,planes and computers are impossible things in that time.But the industrial revolution changed everything.American industry exponentially grew after industrial revolution.
It can be seen from the example of American modern industry,making advanced become possible,the state should rely on innovation and industrialization. Innovation of industry can enhance the output value of labor,create jobs,improve living standards,enhance the country”s international competitiveness.In a word, innovation can provide huge benefits to the country.But how it does works?
“Competition[in the global economy] is going to be much more fierce and the winners of this competition will be the countries that have the most educated workers,a serious commitment to research and technology,and access to quality infrastructure like roads and airports and high-speed rail and high-speed Internet.Those are the seeds of economic growth in the 21st century.Where they are planted, the most jobs and business will take root.”
——President Barack Obama,December 6,2010
Under the several assumptions behind the Solow model approach ( perfect competition, CRS, diminishing marginal returns, constant population growth rate, constant and exogenous technological progress, constant savings rate), one interesting outcome is that given an exogenous source of change (shock) – such as a new available technology due to innovation and knowledge will lead in the long – term (… Read more
Under the several assumptions behind the Solow model approach ( perfect competition, CRS, diminishing marginal returns, constant population growth rate, constant and exogenous technological progress, constant savings rate), one interesting outcome is that given an exogenous source of change (shock) – such as a new available technology due to innovation and knowledge will lead in the long – term ( steady state) to economic growth. It happens because, under a constant population growth the accumulation of capital is higher, therefore the capital per capita (per person) is also higher. A concept that is implicitly derived from this model is poverty trap – that is the low income countries will remain poor because they are not able to escape from that trap, not only due to large population growth (not assumed in the model) but also to the fact that they do not have access to technology and innovation which, as already discussed, seems to be fundamental to development and growth processes.
Recognizing the importance of innovation to economic growth well illustrated in the Solow Model (at macroeconomic level), the next desirable step would be defining policies that aim to improve innovation systems. Policy – making and decision is important for impact evaluation purposes, I mean one should evaluate the consequences – either positive or negative of an implementation of a given policy, in order to define causality(ies) – the main concern of the economists.
In the following lines, I express my view about one of the policies aimed to be implemented at European Union level in what respects Innovation. As one knows , innovation issues are entailed in the strategy of Europe until 2020 – R&D should achieve the threshold of 3% of GDP of the Member States. And the reason behind this fact is that Europe faces, at the moment many challenges that can be fulfilled through innovation, such as competitiveness of companies in global market, get rid of the crisis, secure resources like fuel and food, global warming, improvement of smart and ecological means of transportation, among others; but also some constraints: lack of financial resources, costly patenting, fragmented efforts among members and regions.
According to the actual president of European Commission, Jean Claude Juncker, Europe needs a “reindustrialization”, where innovation necessarily takes a position. Europe had already defined several commitments concerning Innovation Union, which the more expressive ones are: “put in place national strategies to train enough researchers”, “ test feasibility of independent university ranking”, “ create business – academia Knowledge Alliances”, “Propose an integrated framework for e-skills”, “Propose an ERA framework and supporting measures”, “ Creation of Pan- European Pension Fund for Researchers”, “ Construct the priority European research infrastructures”, “ Put in place EU level financial instruments to attract private finance”, “Ensure cross-border operation of venture capital funds”, “Strengthen cross-border matching of innovative firms with investors”, “ Deliver the EU patent”, “ Present an eco- innovation action plan”, “ Establish a European Creative Industries Alliance”, “ Develop a European Knowledge market for patents and licensing”, Safeguard against the use of IPRs for anti-competitive purposes”, “ Improve the use of structural funds for research and innovation”, “Put in place integrated policies to attract global talent”( see more at “State of Innovation Union, Taking Stock 2010-2014”).
Among the exhaustive list of the commitments that Europe seeks to ensure, I would like to focus on the first one –“ Put in place national strategies to train enough researchers”. One have been referring to innovation as the main input and output for knowledge production, nonetheless without previous human capital investment ( and even a step back- childbearing in an ageing Europe!!) – that is – education, formation and training, the desirable return – innovation is impossible. Moreover, this investment should be complemented with engagement of people to keep studying and to be a researcher, besides their intrinsic motivation and abilities to do so. One important non-financial incentive that can be given to a researcher is to connect his/her work to business or services, it is a manner of recognition of talent and a spread of innovation and Knowledge (“ Europe has relatively few researchers employed in industry, making up only 45 % of total researchers compared with 78 % in the US, 74 % in Japan and 62 % in China.”). Actively integrate researchers in labour market seems to be an important response to improve synergies between different interests and responsibilities in a corporate environment and boost global competitiveness. Researchers are indeed the most essential input, but also the hardest to perfectly accomplish.
Instead of identifying a particular policy measure set up by the European Commission, I think it is much more interesting to focus on what goes on even deeper behind the scenes and the decisions that the EC will be taking over the last years of this decade.
In order to help fight the ever growing markets that BRICS are, the European… Read more
Instead of identifying a particular policy measure set up by the European Commission, I think it is much more interesting to focus on what goes on even deeper behind the scenes and the decisions that the EC will be taking over the last years of this decade.
In order to help fight the ever growing markets that BRICS are, the European Commission has decided to set its focus on what Europe does best and that is to innovate. BRICS are playing the catch-up game and create value that is mostly coming from common goods that European countries aren’t willing to produce on their own soil because of costs. The EU on the other hand has the clear advantage when it comes to research and development as well as innovation.
The European leaders have therefore decided to create think-tanks amongst which the “Research, Innovation, and Science Policy Experts” also known as RISE that is set in the line of Europe’s 2020 strategy focused on growth driven by innovation and research.
RISE is composed of 38 members coming from very different backgrounds sharing one common goal; help Europe sustain a stable growth driven by innovation.
I do believe that delegating tasks as important as finding ways and overall strategies to help Europe find its way for the rest of the decade but also for the decades to come is of the utmost importance. For the last 10 years, Europe as well as the US have been losing the economic battle against emerging countries who can produce at a much lower cost, with almost the same quality and just as efficiently. Big industries have been relocating left, right and center to greener grass in Bangladesh, China or Taiwan which has led to higher rates of unemployment and in terms strikes.
The European Commission knows that now is the perfect time to act as Europe’s biggest strength is not its industries anymore but its intellectual manpower. The power to innovate and to create is still Europe’s best weapon to fight off possible newcomers and competition coming from emerging countries.
While I deeply believe that everyone should have its share of the pie, I also believe that each country or group of country should be focusing on what it does best, what it can offer that no one else can or that no one else can produce for as cheap. If that is not the case, countries able to provide cheaper labour whether it be intellectual man power through innovation or manpower creating tangible assets, I expect economic cannibalism to happen. Smaller and poorer countries that cannot keep up will suffocate and be eaten by the major players in a more globalised economy than ever.
In his 2014’s State of the Union speech, Barack Obama said : « We know that the nation that goes all-‐in on innovation today will own the global economy tomorrow. This is an edge America cannot surrender » (see all his address at the following link http://www.whitehouse.gov/the-press-office/2014/01/28/president-barack-obamas-state-union-address).
I think that is a very ambitious though and in order to enforce innovation and… Read more
I think that is a very ambitious though and in order to enforce innovation and economic growth President Obama established some policies. I’ll point out one in particular : education.
Indeed, I believe that education is the main key of innovation and economic growth as a lot of scientists have already argued in many papers.
Education starts at the very first years of school and particularly during the primary school. All children should access to a good education in order to be well-‐educated, have an open mind and an entrepreneurial spirit.
Barack Obama is well aware that education is the key and mentioned some facts in his speech : « … the White House just organized a College Opportunity Summit where already, 150 universities, businesses, and nonprofits have made concrete commitments to reduce inequality in access to higher education – and help every hardworking kid go to college and succeed when they get to campus ».
« We also have to prepare tomorrow’s workforce, by guaranteeing every child access to a world-‐class education ».
I totally agree with him but what about teachers, educators, instructors and so on ? In my opinion I believe that it is important that government invests in teachers’ training by doing regularly some traineeship in order to keep teachers aware of our very quickly changing world and to lead them at the forefront of teaching.
By doing so, not only every child would access to education but also benefit from best education and are well prepared to innovate in future years.
There are obviously many other factors that lead to economic growth such as absence of inequalities, gender equalities, low unemployment rate, health insurance, etc. but I think that education is the fundamental one.
I would like to comment Barack Obama's quote. In a general point of view, innovation seems to be a source of economic growth, there's no doubt but the context is key.
A first point explain why context change the way that innovation impacts an economy. As Krista Donaldson explained during a TEDx conference (https://www.youtube.com/watch?v=zPUsaFDF9r0), we see that innovation won't bring well-being… Read more
I would like to comment Barack Obama’s quote. In a general point of view, innovation seems to be a source of economic growth, there’s no doubt but the context is key.
A first point explain why context change the way that innovation impacts an economy. As Krista Donaldson explained during a TEDx conference (https://www.youtube.com/watch?v=zPUsaFDF9r0), we see that innovation won’t bring well-being just because it is innovation. There is a need to think about the after-launch, to think about how to use it and in what extend is it good.
I don’t think we can ignore the responsibility we gain from innovating. Indeed, Leò Szilárd had patented the nuclear chain reaction in 1934. That was pretty innovative. But from today’s perspective, his research brought to nuclear bomb. Wikipedia (don’t consider it as a source but well as an illustration) says “In a very real sense, Szilárd was the father of the atomic bomb academically” (http://en.wikipedia.org/wiki/History_of_nuclear_weapons).Ethics should be involved in the innovation quest.
My second point is about the “America” focusing. Since the context is so important, how is it possible to build an economy withdrawn into itself? We’re living in a global world. Marshall Mc Luhan talked about a “Global Village” where “everywhere is now our own neighborhood”. So I am not sure that focusing an economy on his own country is a good solution for sustainability. Of course it is important to stop employing low paid workforce to increase profit, but I’m not sure that a country can use its own “energy” even the USA.
Finally, there are still some key words that are important; together, build an environment, skills. These are challenging theme. Working together is not obvious when it comes to reality and it is still a way to go further. As I said, the environment, the context will define the evolution. And skills, with all the aspects it means but it’s not the place to detail it, is a source of future growth for economy, well-being, equality… and, needless to say, not only for the USA.
To conclude, I feel like Obama has good considerations for his country and I like his concern for the people. But the solutions are not easy to find and there’s still a long way to go I guess.
Thanks for your comment. Do you have a specific policy in mind (proposed or implemented by Barack Obama)?
Kasper Vagle
Those who need innovation can’t afford it.
On a global scale I find it alarming, yet not surprising, that both candidates running for president last American election focused on innovation in America. To earn votes it makes perfectly sense, but at the same time it highlights the problem of what we value in innovation.
Most innovations are valued based on their… Read more
Those who need innovation can’t afford it.
On a global scale I find it alarming, yet not surprising, that both candidates running for president last American election focused on innovation in America. To earn votes it makes perfectly sense, but at the same time it highlights the problem of what we value in innovation.
Most innovations are valued based on their potential return. A good invention isn’t an invention that saves lives, creates peace or solves global warming. A good invention makes money. Of course, if you can cure deceases or avoid a war the public will also consider it at “good” invention.
Why is this true? Because of all the inventions we came up with the last decade, and the once we will come up with this year or in a few years are in majority trying to solve first world problems. I’m not saying this is a bad thing. It’s amazing how we are able to do all sorts of things in a better way. But we neglect a huge part of our fellow brothers and sisters walking around on this planet.
The problem I want to highlight, is for example that millions are spend on making people in the west able to live a year or two longer, while at the same time people die from the lack of good medications around the world. Why is this? Because its not profitable to target this groups of people.
You might ask how this can change, and I don’t have a good answer to that (I guess if anyone had, they would already be in possession of a few Nobel prizes).
You might say I’m a dreamer, as John Lennon sings. But what I’m hoping for is a way of valuing innovations that could change our course, and that the next candidates running for president in any country will say:
“We can work together to create an economy build on global manufacturing, global energy, and skills of all the workers around the world.”
For my part, economy is driven by many things and innovation it one of them. For decades, even centuries, innovation has created jobs and wealth but also raised well-being in homes and at work. Innovation is everywhere around us and change everyday our way to live.
In my opinion, an important aspect of innovation is education. I think that Barack… Read more
For my part, economy is driven by many things and innovation it one of them. For decades, even centuries, innovation has created jobs and wealth but also raised well-being in homes and at work. Innovation is everywhere around us and change everyday our way to live.
In my opinion, an important aspect of innovation is education. I think that Barack Obama knows the importance of a better educational system and will succeed to create innovation on a long term point of view.
“If we want America to lead in the 21st century, nothing is more important than giving everyone the best education possible — from the day they start preschool to the day they start their career.”
—President Barack Obama
By making college more affordable, giving higher education and supporting the teachers he gives himself the chance to be competitive in the future.
In addtion to that nowadays to have a post-secondary degree is no longer just a pathway to opportunity for some talented people but it is a prerequisite for the jobs of our new economy. This is the reason investing in education and university is a necessity.
In an article about a report of The Bureau of Labor Statistics in the united states I could observe the comparison between the level of education and the unemployment rate. The figures are really interresting as it exists a direct correlation. For exemple; “in 2007 among the adult population without a high school diploma, the unemployment rate was 7.1%. For American who graduated from high school, that number dropped to 4.4%. If you went on to earn an associates degree, your odds of finding a job continued to improve, with unemployment at 3%. And if you earned a 4-year college diploma, unemployment was just 2.2%”http://www.insideindianabusiness.com/contributors.asp?id=1277#middle.
Those figures show directly the impact of the low level of education on unemployment. I’m convince that in order to innovate we need to have skilled people among our country that have the tools to make innovations and then the growth will follow.
As we can see from this article, innovation is very important for economic growth. Neither Barack Obama nor Mitt Romney and neither the European Commission don’t contradict this. On the contrary, each has his way to support it.
As stated in the website www.sciencedebat.org, innovation is related to the science that ensures continued economic growth. Indeed, since the Second World War,… Read more
As we can see from this article, innovation is very important for economic growth. Neither Barack Obama nor Mitt Romney and neither the European Commission don’t contradict this. On the contrary, each has his way to support it.
As stated in the website http://www.sciencedebat.org, innovation is related to the science that ensures continued economic growth. Indeed, since the Second World War, the U.S. economy has seen its economic growth to rise by nearly half thanks to science and technology.
As we all know, the United States have two candidates for the presidential elections: Barack Obama and Mitt Romney. Each one has his opinion on the subject of innovation, although some points have sometimes the same goal.
On one side we have the former president, Barack Obama, attaching great importance to innovation, industry and invention. That would allow America to achieve economy based primarily on manufacturing, energy as well as workers.
Hence his desire to double the funding for science centers.
On the other hand, Mitt Romney supports rather than innovation is the foundation of economic growth and job creation.
He also wants the American economy to be rebuilt on the basis of free enterprise, hard work and innovation. During his campaign, he even tries to convince other countries such as offering permanent residency to foreign students.
Reading the article, I decided to focus on the speech of Barack Obama. Indeed, these goals are long term than those of Mitt Romney. We can show it when he proposes to train teachers in science and mathematics, which will be useful for future generations, ensuring a good science education for future graduates.
In addition, the outgoing president promises to increase funding for innovation: “I am committed to doubling Funding for key agencies to supporting research scientists and entrepreneurs.”
Moreover, it would increase jobs created by investing in the creativity and imagination of people. Economic growth would be enhanced through investment given to innovation. Barack Obama said about it: “This economic growth will bring Greater income, higher quality jobs, quality of life and Improved to all Americans.” In this regard, he added: “The first step in winning the future is encouraging American innovation. None of us can predict with certainty what the next big industry will be or where the new jobs will come from. Thirty years ago, we couldn’t know that something called the Internet would lead to an economic revolution. What we can do — what America does better than anyone else — is spark the creativity and imagination of our people. ”
(sources: http://www.whitehouse.gov/issues/economy/innovation)
Under innovation and growth, one of the strategies proposed by presidential candidate Mitt Romney is focus on the human capital aspect. Here, he proposes to make immigration laws more flexible for highly skilled foreign students with an aim to attract as well as retain top talent within the country. He also proposes to implement retraining programs so as to empower… Read more
Under innovation and growth, one of the strategies proposed by presidential candidate Mitt Romney is focus on the human capital aspect. Here, he proposes to make immigration laws more flexible for highly skilled foreign students with an aim to attract as well as retain top talent within the country. He also proposes to implement retraining programs so as to empower individual workers.
This policy seems to be in line with the strategy of the country to maintain its global comparative advantage in science, innovation and creation of new products that are technology based or driven.
From an immigration perspective, studies have shown that the contribution by foreigners to science and innovation has grown over the years in terms of patent applications and published research papers or articles. These studies have shown that there is a positive correlation between enrolment by foreign students to US academic institutions and the developments the country is making in innovation. For instance, a study by the US Census Bureau in 2009, showed that 47% of doctorate holders at the national level are foreign students. Therefore, given the continued growth in contributions by foreign scholars to the US economy, making immigration rules more flexible would cork to the country’s advantage.
In addition, investment in human capital especially for research and development purposes cannot be easily refuted since the country’s export in advanced technology products dropped at a lower level (9% less) than the decline in non-technology driven products during the financial crisis as evidenced by a study by the National Science Foundation in 2011. Investing in human capital that will boost the creation of new technology driven products will therefore help the country in reducing trade deficit gaps.
For these reasons, I am in agreement with his proposals on human capital.
In the Science Debate 2012, the two major candidates for the U.S. Presidential election in November were questionned on their plan and ideas regarding several issues such as innovation and education. Furthermore, both of them emphasis the need to stimulate research and innovation in order to be able to address the current economic issues.
Barack Obama made the commitment of… Read more
In the Science Debate 2012, the two major candidates for the U.S. Presidential election in November were questionned on their plan and ideas regarding several issues such as innovation and education. Furthermore, both of them emphasis the need to stimulate research and innovation in order to be able to address the current economic issues.
Barack Obama made the commitment of doubling the government expenditures for research agencies so that scientists and entrepreneurs maintain their efforts in terms of new technologies. As far as I am concerned, I tend to believe that such commitment is a great step that will acknowledge the science area how their government seems to be implicated in their field. However, as in every candidates’ speech, the figures of that kind of measure is often not mentionned or either exagerated. That’s why, I think we should be carefull with declaration of candidates and identify if it is a workable measure that could indeed enhance the sector of innovation.
Moreover, Barack Obama announced that he would meet the challenge of preparing 100,000 science and math teachers over the next decade with the expectation that it will lead to a larger well-trained population. Here, the education is pointed out as a concrete alternative to tackle their loss of leadership in innovation. For my part, I am convinced that this measure is remarkable and will yield great results but I am favour of the people who believe that the quality always prevails over quantity. In other words, I have the fear that there will be many graduated scientists but can we really offer the same level of training to every one..
To cut a long story short, I observe that the link between economic growth and innovation is globally taken into account in a manner that the autorities all around the world are implementing measures that will help to thrive the economic growth. In this way, the proposed policies by Barack Obama are noble and need to be taken into consideration precisely, i.e. identify which are workable and efficient.
Innovation is for the European Commission the main factor of productivity growth in many sectors and companies. This institution also considers that innovation is an important tool for the creation of new jobs.
It refers to both technological innovation and the more efficient use of existing resources and technology, as well as new techniques of management and organization. Innovation has the… Read more
Innovation is for the European Commission the main factor of productivity growth in many sectors and companies. This institution also considers that innovation is an important tool for the creation of new jobs.
It refers to both technological innovation and the more efficient use of existing resources and technology, as well as new techniques of management and organization. Innovation has the potential to generate, absorb and disseminate knowledge, therefore, it is necessary to have people with the appropriate training and skills to develop.
But accepting the previous premise as true, whereas innovation means to increase productivity and ultimately GDP or wealth, along with employment, requires reflection of all of us who claim to remember that natural resources are limited and that the goal of increased production must be analyzed from the perspective of sustainability.
In the field of public administration, innovation is a strategic approach to exploit the great potential for development of a large number of policies such as energy, health, public transport, education and agribusiness. And can do so by entering a vision friendly and sustainable natural resources.
However, while the accumulation of scientific and technological knowledge is really easy to measure through the activity of research and development (R & D), It is more difficult to predict the ability to become innovation, only through productive activity and so that economic growth. We know through indirect measures that knowledge, based on innovation, is key to a better and faster growth, but still do not know the precise mechanisms that make innovation and spread it.
The theory of market failure points some of the obstacles that may adversely affect innovative activity and the functioning of the innovation system: the uncertainty intrinsic to innovative activity, the difficulty of appropriation of the results, meeting frequently with the innovative inability to prevent the free use of it (public good), the favorable impact on other activities, sectors and economic growth itself and competitiveness of the economy are the diffusion of innovations (positive external economies), which does not necessarily affect the generator of innovations. In sum, these observations indicate that, without government intervention, innovative activity is insufficient from the social point of view.
But also true that the process of innovation is not exclusively determined by market forces instead, for its effectiveness is absolutely necessary functioning of the Science – Technology – Enterprise (innovation system), in which the market is only one hand and have to join organizations and networks.
Thus, the ultimate success of the innovation process depends not only on innovative agents individually, but generally is a result of effective interaction of all agents in the innovation system, from universities and research organizations up the companies and centers of technology transfer processes.
Conclusion:
From my point of view the European R & D can not and address itself to all the challenges posed by modern society. Europe’s competitiveness and ability to create jobs and wealth are in the hands of all of us and our ability to work together for the common welfare of European citizens.
In October 2012 the European Commission has introduced key topics under a new initiative called Innovation Union, of which the subject of increasing social benefits is of important issue. In the following I will take a critical look at one of the four subsections named Social Innovation.
In relation to social needs like working conditions, education to community development and health… Read more
In October 2012 the European Commission has introduced key topics under a new initiative called Innovation Union, of which the subject of increasing social benefits is of important issue. In the following I will take a critical look at one of the four subsections named Social Innovation.
In relation to social needs like working conditions, education to community development and health to strengthen civil society, social innovation refers to new concepts, ideas, strategies and organizations.
The concept finds its roots in the long tradition of Innovation as a driver of competitiveness of institutions and regions.
Social Innovation takes place between the public, private and third sector.
Learning networks such as pilot actions have been set up at EU level with the objective to act for and with the community towards development and a higher quality of life.
This is to be implemented by developing capacities and support infrastructures that assist public administrations in raising awareness of the value of social innovations, providing financial support to social innovators, giving a good example across national borders to share experiences and scaling up successfully tested Innovations.
In this relatively new field of Innovation, the EU has an important role to play. It is to inspire solutions to all European countries by the good practices in some EU Member states. To see the possibility of Social Innovation offering a way to approach social challenges when the market and public sector do not respond to the social needs.
Unlike most economic topics, Social Innovation is motivated by social needs rather than profit. Considering the increasing weight of education, health and social work in both employment and GDP, there of course is a rising economic impact.
A main problem arises in the implementation of Social Innovation when it comes to the limited financial support and insufficient technical skills necessary for organizations to develop and deliver social innovation.
I am of the opinion that there is a real need and potential for Innovation in the public sector, in order to deliver services of new and superior quality that respond to the users needs and expectations the efficiency of the public sector needs to be increased.
At present, Social Innovations have become indispensible and will be even more so in the future. Otherwise, peace and development would be at risk in a global society with problems such as climate change and the growing income disparity.
Also the Example of endless knowledge-based technological Innovation is indeed still valid but has been fundamentally revised, therefore we must not only focus on economic innovation.
Europe should participate in this new field of initiatives and follow Countries like the USA and Canada so it can among other things take the lead in this vital evolution.
“The most urgent and important innovation advance in the 21st century will take place in the social field. Technical innovations will continue, of course, and bring about a materially and immaterially utterly changed environment and new living conditions in comparison with previous possibilities; but the social innovations will be those that the inhabitants of this world must first produce or ensure” (Hochgerner 1999, 37)
To conclude it can be said, that despite the high importance of Social Innovation, Innovation ought to be economic, social and environmental at the same time.
When speaking about his Growth Agenda, the republican candidate at the presidential election, Mitt Romney, said: “We must reform America’s legal immigration system to attract and retain the best and the brightest, and equip more Americans with the skills to succeed.”
First, I don’t think that the real problem is the legal immigration system, because the US are still attractive for… Read more
When speaking about his Growth Agenda, the republican candidate at the presidential election, Mitt Romney, said: “We must reform America’s legal immigration system to attract and retain the best and the brightest, and equip more Americans with the skills to succeed.”
First, I don’t think that the real problem is the legal immigration system, because the US are still attractive for students and workers. If you are one of the top guys on a particular topic and you want to work or do some research in America, you won’t have a lot of trouble to go there, doors will even open from themselves.
On the other hand, I think that innovators and researchers follow a trend: companies make investments in countries where it’s benefic and advantageous for them, those countries adopt the new technics and technologies to develop themselves. They become thus attractive for innovators and researchers. In this case, American firms went to Asia because it was cheaper to produce there and the labor constrains were lower than home. Asian countries used what they learned from those firms to help their country grow. Now those countries are as attractive as the USA for innovators and developers.
So to “attract and retain the best and the brightest”, the USA shouldn’t have invested in foreign countries and should have kept their technology for themselves. In order to be attractive as they were, they should encourage and promote foreign firms to locate in the country.
The Lisbon Treaty calls for the establishment of the European Research Area (ERA), a grand undertaking seeking to create a unified research area in which the free movement of knowledge among public and private institutions is facilitated, encouraged and rewarded. The European Commission has set itself the ambitious aim of concluding this project by 2014. The ERA, as one of… Read more
The Lisbon Treaty calls for the establishment of the European Research Area (ERA), a grand undertaking seeking to create a unified research area in which the free movement of knowledge among public and private institutions is facilitated, encouraged and rewarded. The European Commission has set itself the ambitious aim of concluding this project by 2014. The ERA, as one of the cornerstones of the Innovation Union mentioned above, is meant to promote Europe as a knowledge based power, to enhance its competitiveness, increase the number of innovations and thereby promote economic growth.
The Solow Model, as well as endogenous growth models, have emphasized the importance of innovation. And are an excellent departure for in depth analysis of economic growth. Some very renown models tell the story of workers and researchers, and the spillover effects the latter generate. To me, this point is crucial. Although endogenous models may be arguable, they convey the important message, that it’s not all about how much research actually materializes, or the funds directed towards it. Knowledge spillovers are directly conducive towards the technology growth rate, and therefore a key driver of economic growth. The benefits of making an effort to enhance cooperation between different institutions may prove to be equally valuable to the development of Europe, as more research facilities or increased funding. The 2012 Communication by the European Commission evidently lays emphasis on spillovers, given that the ERA is exactly the kind of Open Innovation platform, which would unleash their potential as economic growth factors. Having said this, the question arises whether the measures proposed, and set in operation by the EU are too eager, or even require additional effort.
Some may argue, that increasing interaction between varying research platforms may in fact lead to less research. This has also been shown empirically: two researchers working on comparable projects may in fact prove reluctant, if only one of them can reap the benefits. Nevertheless, I believe the improved funding and increased Europe-wide mobility targeted by the European Commissions Framework programs could do away with these effects in the medium run. The reason being, that this particular form of disinclination results primarily from limited opportunities within the market for innovations. Yet an example of an EU policy preventing this from occurring would be ERA-NET, which could potentially increase competition when needed or ensure cooperation whenever desirable.
Furthermore, I believe the ERA may, in fact, not be ambitious enough. Although the EU Commission explicitly wishes to increase the number of public-private partnerships (PPP) and encourages the privates sector to voluntary develop an improved business-academia mobility, I believe that in the end the private sector may not be involved enough. And this, I consider to be an important point: it’s not just about spillovers and ideas and innovation, it’s also about who carries them out and where they are put into practice. Large Companies may be in favorable positions to innovate, and new ideas should find their way there. With respect to these enterprises, this may imply incentives that encourage companies to remove internal barriers to open innovation, while still protecting the knowledge generated. For small companies or start-ups, Europe often lacks the kind of financial infrastructure (esp. venture capital in this context), which could sustain the effort to innovate.
In conclusion, innovations are a key driver towards economic growth. The European Research Area as a project is beyond desirable and will in my opinion be crucial to an improved network of ideas, which may spur Europe’s innovative capacity. However, I believe it should lay even more emphasis on cooperation with the private sector, alongside better, but reasonable, incentives for the latter to seek cooperation.
In light of the “key initiatives” published by the European Commission in Octobre 2010 and its Europe 2020 initiative, Innovation Union, I would like to talk about a subject only partially - and therefore in my opinion insufficiently addressed - by the these key initiatives: namely European Entrepreneurship.
In an article published on the 26th of July 2012 in the… Read more
In light of the “key initiatives” published by the European Commission in Octobre 2010 and its Europe 2020 initiative, Innovation Union, I would like to talk about a subject only partially – and therefore in my opinion insufficiently addressed – by the these key initiatives: namely European Entrepreneurship.
In an article published on the 26th of July 2012 in the Economist the author makes an excellent case for why Europe is not producing as many new and successful countries as e.g. the United States or China. According to an article by Nicolas Veron and Thomas Philippon, members of think-tank called Bruegel, only 12 big new listed companies have been created in Europe between 1950 and 2007. In comparison the United States have managed to produce 52 in the same period. Of the adult population of France and Germany only 5.8% and 4.2% can be classified as “early-stage” entrepreneurs, numbers that pale in comparison to America’s 7.6%, China’s 14% and Brazil’s 17%.
The article identifies various reasons, which I will condense into three main points. (1) The lack of risk-taking entrepreneurial culture in Europe, (2) insufficient financing for European start-ups and (3) bureaucratic issues (e.g. rigid labour law, a restrictive bankruptcy laws).
The first point is more of a psychological phenomenon, which is probably connected to post-WWII risk-aversion in Europe, seeing as plenty of big companies were founded in the 19th and 20th century Europe prior to WWII. It will be hard for the European Commission to attack a problem so deeply rooted in today’s European culture and maybe not the most advisable issue to meddle with, since encouraging risk-taking with policies can result in a lot of inadequate business ventures, if not done with the utmost care and precision.
Of these three points, the only one addressed by the program is (2) financing for innovative companies in the key points 10-13. Financing is extremely hard to come by for entrepreneurs trying to set up a new business in Europe. Venture capital appears to bear too many risks for European institutional investors. For an asset class such as Venture Capital, which invests into companies at a very early stage and thus communication is essential and has to be as easy as possible, operating in the same language and culture is important. This means that financing from abroad will not be able to compensate for a lack of financing from European investors. This is why the measures to be implemented by the European Commission such as creating financial instruments to increase private financing of innovative companies or facilitating the investment opportunities of Venture Capital funds throughout Europe are very important.
The final point (3) the bureaucratic issues should definitely enjoy more attention from a program, aimed at boosting innovation in Europe. In Germany honest bankruptcy can hinder an entrepreneur from starting another business venture for 6 years on average, whereas in the US the process is usually complete in less than a year. Another issue is rigid labour law, which prevents start-ups from being able to lay of workers quickly in a turbulent market environment, in which a new company will undoubtedly be positioned. An issue to solving these issues will of course be the necessity for EU members to cede certain degree of authority over subjects, traditionally a part of national politics, to a higher entity.
To sum up, in my opinion European Entrepreneurship does not receive the attention it deserves, although the program does consider the issue partially by attempting to remove obstacles to financing for innovative companies. Although the issues may be hard to solve, especially in light of recent disunity between EU members over certain political decisions. Getting European entrepreneurs back onto their feet should be a main goal in a political agenda focused on fostering economic growth by promoting technological innovation in Europe.
Thanks for the link. Note that the LSM (jointly with other departments of UCL) offers the program CPME, which is oriented towards entrepreneurship and the creation of SMEs.
Valentine SIraut
Creating a single innovation market
I would like to express my option on one of the key initiatives taken by the European Commission and listed in the Communication on Innovation Union published on 6 October 2010(http://ec.europa.eu/research/innovation-union/index_en.cfm?pg=action-points).
“By early 2011 the Commission will present an eco-innovation action plan building on the Innovation Union and focusing on the specific bottlenecks, challenges and opportunities for… Read more
Creating a single innovation market
I would like to express my option on one of the key initiatives taken by the European Commission and listed in the Communication on Innovation Union published on 6 October 2010(http://ec.europa.eu/research/innovation-union/index_en.cfm?pg=action-points).
“By early 2011 the Commission will present an eco-innovation action plan building on the Innovation Union and focusing on the specific bottlenecks, challenges and opportunities for achieving environmental objectives through innovation.”
Investing in an eco-innovation action plan can boost the European Growth at a long term point of view while protecting the environment.
“Eco-innovation plan” would include all the progress in terms of sustainability and environment. In other words the plan would encourage the nations to act together more responsibly for the planet, and protect the public goods.
I tend to think that a single eco-innovation market would encourage the members of the EU to work on a common project and would boost the economic growth at long run.
Nowadays, due to the financial crisis the companies are more likely to focus on profit in order to keep the head above water. What’s more, in different sectors the market is very competitive and enterprises overseas are already leading the international market and there is not space for small EU enterprises to enter.
This plan, would developed in the EU a key value and make the industry more competitive at long run which would boost the employment in Europe and in this way assure a future for the public goods.
More over, investing in “eco-innovation” requires a lot of financial resources and in time of financial crisis, individual EU members are less likely to invest resources for sustainability R&D. By acting together, the EU could raised funds easier and help smaller project to be developed which would encourage people to think more eco-friendly in their daily life.
In a nutshell, Creating a single innovation market, and following an eco-innovation action plan “will contribute to achieving environmentally and socially sustainable growth in the longer run and, indirectly, economic recovery in the short-term. ”
I would like to comment on the topic of climate change which was debated in the Science Debate between the current president Mr. Barack Obama and Mitt Romney.
The funding on energy research and the promoting the work of organizations like ARPA-E has been supported by both the candidates. However, the candidates differ markedly on the issue of development and creating… Read more
I would like to comment on the topic of climate change which was debated in the Science Debate between the current president Mr. Barack Obama and Mitt Romney.
The funding on energy research and the promoting the work of organizations like ARPA-E has been supported by both the candidates. However, the candidates differ markedly on the issue of development and creating a market of new energy technologies. The current administration supports cap and trade mechanism, fuel economy standards and wants to promote renewable energy sources like Solar and Wind Energy. The key policy here is to reduce the carbon dioxide emissions. The Democratic Party strongly supports this stand and to significantly reduce the pollution that is causing the climate change.
President Obama has strongly supported cap-and-trade system (A system that is meant to reduce certain kinds of emissions and pollution and to provide companies with a profit incentive to reduce their pollution levels faster than their peers.). The limits upto which the carbon dioxide and other gases can be emitted is set and utilities are given free market incentives to reach the limits. The goal is to have “clean energy standard” which aims to achieve as much as 80% of electric generation from sustainable or nuclear energy sources which have few carbon releases. The alternative source of that energy would be high technology gas fuelled and coal powered generators that cause very less pollution.
Even in his last election campaign, Barack Obama supported clean energy through his “New Energy Plan”. The plan sought to invest in renewable energy sources, reduce reliance on foreign oil, address the global climate crisis, and create jobs for US citizens.
The concept of clean and green energy will be accepted by the US citizens if implemented in an economically viable manner. However, it might face opposition from coal-reliant utilities.
Most of the things said by the current president are more or less a repetition of what he had said in his last election. A few policy measures president Barack Obama and their impacts are discussed below:
a. The natural gas is a cleaner fuel and according to experts should last at least 100 years.
New tax credits have been proposed for vehicles that run on natural gas and will be good news for companies like Chesapeake, Devon and EOG. As a result of increased production, the prices of natural gas have decreased in the past few years.
b. Federal standards will be raised for fuel efficiency of cars and light trucks to seek to reduce greenhouse gas emissions from fossil fuels due to climate change concerns. There will be a focus on Clean Air mandates and the $4 billion in tax breaks for the oil and drilling companies will be eliminated.
c. New leases have been offered for oil drilling in spite of recent BP oil spill case. This shows the attitude of the administration that it is not opposed to the non renewable sources of energy or unduly in favour of agenda that promotes renewable.
d. Coal and nuclear energy don’t find direct mention in the policies but they have not gone unlooked. There is an $8bn loan for a new nuclear plant in Georgia and Obama is supporting clean coal but has moved forward for clean air laws that might shut down some coal fired plants.
e. In case of renewable energy sources like wind and solar, the current president will be extending tax credits that will give the firms as much as 30% subsidy and will allow the corresponding companies renewable projects on its lands. Energy from solar and wind, though constituting a relatively smaller art of total production has increased threefold in the past 4 years. The Oil and natural gas production has increased as well due to rise in the oil prices. If the present trend were to continue, the imports of oil and natural gas will decrease significantly in next 8 years. This is an important point because Mr. Mitt Romney has opposed the subsidies to these renewable sources and has called them unreliable. Though he has supported the support to research and development in this area, he considers the risks too high and rewards highly uncertain to attract investments.
In the long run, the sustained investment in clean energy along with the economic stimulus program will lead to a decrease in the energy costs and an increase in competitiveness and in the number of jobs. It will also reduce the dependence on non renewable sources of energy and will be highly beneficial. The consumer and environment will benefit as a result of these policies and businesses flourish when the consumer benefits.
Good and thorough analysis. Next time, don’t forget to quote your sources.
DECLERC Gilles
I will give my opinion about one particular measure that the European commission will put in place future. This measure is about pooling forces to achieve breakthroughs: European innovation partnership.
The thing that I found interesting in that commitment is that they want to radically cut the CO2 emission and other sources of pollutions in city and to found… Read more
I will give my opinion about one particular measure that the European commission will put in place future. This measure is about pooling forces to achieve breakthroughs: European innovation partnership.
The thing that I found interesting in that commitment is that they want to radically cut the CO2 emission and other sources of pollutions in city and to found alternative source of energy which will substitutes increasingly scarce raw materials.
In my opinion, this commitment is one of the most important of the list set by the European commission for two reasons.
First of all, we all know that fossils energy will be soon not available and so it’s primordial to find new solution to substitute it. Moreover, it could be attractive in term of growth that we control the future “global” energy (mean use all around the world like fossil energy today). It is for us to be in leading position in term of using the new energy technology in order to ensure we will be a major player in this key future issue.
Secondly, I think that innovation is long term investment. It is never asked the research and devolvement unit to have immediate results but to invent, think or create the new revolutionary idea or technology that will bring a future competitive advantage. In this view, I think that the major factor that will bring a competitive advantage to a country or enterprise in a near future is the mastery of news energy and technology to use it.
As mentioned in this blog, science, technology and innovation are essential elements toward economic growth. This makes me want to highlight the importance of education for youth in these three specific fields.
During the debate on the 4th of September 2012, held on ScienceDebate.org, Presidential candidate Obama proposed measures regarding education in the United States. I took a particular interest in… Read more
As mentioned in this blog, science, technology and innovation are essential elements toward economic growth. This makes me want to highlight the importance of education for youth in these three specific fields.
During the debate on the 4th of September 2012, held on ScienceDebate.org, Presidential candidate Obama proposed measures regarding education in the United States. I took a particular interest in his policy measure to “establish new national STEM Master teacher corps in 100 sites across the country and expand it over the next 4 years to support the best STEM teachers in the nation”. In my opinion this measure could be a concrete step toward what Obama see as “Educate to innovate” as well as continuity to his previous decisions on that matter such as his goal to “add 100,000 STEM teachers over the next decade”. It’s a progressive measure which I think will be beneficial in the long term.
With this measure, Obama wishes to “strengthen the STEM education”, an educational system already in place which provides the students knowledge, skills and understanding in the fields of Science, Technology, Engineering and Mathematics (for more information http://www.isa.org/InTechTemplate.cfm?template=/ContentManagement/ContentDisplay.cfm&ContentID=83593 ). These fields are directly linked with innovation which is a necessity, now more than ever, to differentiate oneself in a very competitive market, to stay on top and to advance. This will then have an impact on the economic growth. Moreover, by prioritizing this measure, I believe it will also have a positive impact on some other measures related to science (for example innovation and economy, climate, R&D, energy, etc.). More precisely, I think the STEM education system will provide the tool for the students to become skilled assets who will in return contribute to the development of a specific field.
Nevertheless one should think about the feasibility of this measure. Funds should be placed and invested carefully. This can be hard to see with long term projects since the results are not directly visible. Also, for this project to work it is important to have qualified teachers in these fields; and students should show some interest in following this program. Indeed, it is important that a correct and skillful education is given from the beginning because students will build up their knowledge on the basis they have.
To sum it up, despite the risk of a bad investment in poor quality, this new measure, if well established, will surely bring an improvement to the educational system and prepare the new generations with tools they can use to face the challenges of the future as well as “the tools to out-innovate and out-compete the rest of the world”. (see ScienceDebate http://www.sciencedebate.org/debate12/ ) .
The reading of those different documents is particularly interesting to get an overview of the problem of the innovation across the European member states. I would like to focus my point of view on one of the key initiatives which was listed in the “Communication on Innovation Union” published on 6 October 2010. This focusing will be the “Reforming… Read more
The reading of those different documents is particularly interesting to get an overview of the problem of the innovation across the European member states. I would like to focus my point of view on one of the key initiatives which was listed in the “Communication on Innovation Union” published on 6 October 2010. This focusing will be the “Reforming research and innovation systems”.
The proposition is that “Member States are invited to carry out self assessments and identify key challenges and critical reforms as part of their National Reform Programmes. The Commission will support this process through exchanges of best practice, peer reviews and developing the evidence base. It will also apply them to its own research and innovation initiatives. Progress will be monitored in the framework of the integrated economic coordination (‘European semester’).”
In my opinion, reforming research and innovation systems can lead to a better efficiency and it could be the way of an economic growth which is very important regarding to the current economic context. European member states have a lot of individual talents across this big continent; building a bridge between those different talents is for me an imperative. Improving the communication between the researchers will drive to a better optimization of innovation processes.
For me, merging the individual efforts and the individual competences is one of the key to succeed in the innovation and it is also a method that can decrease the waste of money and time. Creating a pool of innovation into the Europe, managing the different programs into a single institution seems to me a beautiful challenge.
A change like it is extremely difficult to put in practice. To my eyes, the bigger issue is the privacy of the different researches made into the companies. However, the European institution can create a tool – thanks to the new technologies for example – which increase the communication between industries. My point of view is that there is some waste of money and time because some companies spend a lot of money to reach the same goal. A public and independent institution can help to coordinate it.
The main issue of the success of the reforming is for me the resistance of companies which protect their owned innovation as a treasure and we can understand it. Some rules have to be made and if not, the project of the European commission will stay a dream… But for the health of the economic growth and the European competitivity, it has to be a reality.
I choosed to discusss the "Innovation Priorities For Europe" addressed by Mr. Barroso to the European Council on February 4th 2011.
In 2011, Europe was (and still is) in critical situation but it tried to maintain a sufficient level invest in innovation. The european share of GDP on R&D was 2% and the target was only 2,7%- 2,8%. However in… Read more
I choosed to discusss the “Innovation Priorities For Europe” addressed by Mr. Barroso to the European Council on February 4th 2011.
In 2011, Europe was (and still is) in critical situation but it tried to maintain a sufficient level invest in innovation. The european share of GDP on R&D was 2% and the target was only 2,7%- 2,8%. However in net spending, China will spend more than the EU by 2014. More efforts and measures have to be undertaken in order to face the increasing competition!
In order to boost innovation spending toward R&D, EU will undertake 4 major steps according to Mr. Barroso.
For each point I will give my opinion.
1. Smart Fiscal consolidation
Barroso wants a “rigorous fiscal consolidation and growth-friendly expenditure”.
Personnally I think it’s more easy to say than to actually apply it in reality because the tax system in Europe is complex and not homogenous. Some memeber states (e.g. Belgium) have a very complex tax sytem which can complicate the innovation. On the otherside the Amercian Tax System is way more simplier and efficient, which contribute to facilitate innovation.
2.Improved framework conditions
-Volonty to create an homogenous EU market for evnture capital funds
-Faster setting of European standards
-Increase of pool of excellence in areas of societal concerns (cf. first Innovation Partnership “Healthy and active ageing”)
-Best practices in using public procurements
I agree with all the subpoints listed and agin the challenge will be to uniformized the rules and put all the engeries of all member states together
3.Steer and monitor at EU level
It is important to clear the role for the European Council to steer progress. The overall 3% R&D target has to be used as acompass. Complete the European Research Area by 2014 by unnblocking deal to ensure full mobility of researchers, and by attracting new talent.
Very relevant point because the number of institutions and particular tasks assigned to each of them can be confusing. But clarifying the role at the upper level of EU can boost innovation.
4. Future-oriented EU budget
A common strategic framework to pool resources and facilitate joint programming.
With references of Obama’s answer to the Top American scientist Questions, Sep, 4,2012, I will give my opinion about his policy of preparing 100,000 science and math teachers over the next decade, as a solution of ensure America remains the world leader in innovation in the following paragraph.
Nowadays, with shortage of natural resources and increasing degree of pollution, the… Read more
With references of Obama’s answer to the Top American scientist Questions, Sep, 4,2012, I will give my opinion about his policy of preparing 100,000 science and math teachers over the next decade, as a solution of ensure America remains the world leader in innovation in the following paragraph.
Nowadays, with shortage of natural resources and increasing degree of pollution, the economic growth is facing a serious problem. According to the research, economic growth was mainly depends on industries using raw materials and energy to product, the dependence on natural resources are more than 60%. However, in the knowledge economic mode, which would based on invention, innovation and high technology, the dependence of nature resources is less than 20%. For instance, in 1960, the total consume of steel in the U.S was 1.2 hundred million tons, while in 1990, the GDP increased 2.5 times, the total consume of steel was only 10 million tons. Knowledge has replaced nature resources’ indispensable position and becoming the main resources over the years. Thus, I believe that developing innovation and knowledge economic would be one of the most practical solutions for lack of raw material and keep sustainable economic growth.
The essential step to achieve knowledge economic is developing human resource. We already know that knowledge is the main source of economic growth, but whether knowledge could transferred into economic value or not depend on the conversion rate of the knowledge productivity, that is, how much knowledge could be transferred into economic value is an important indicator to measure the rate of economic growth. To transform the knowledge into productivity, the workers have to be educated and then apply innovation in their industry, to improve production equipment and methods, improve efficiency by using their skills. Therefore education is an important part of knowledge transforming, through education, the existing knowledge was taught to workers, and then new ways would be innovated by them to promote the productivity, hence promote the economic growth.
To conclude, this policy of increasing 100,000 teachers would in the long run improve the quality of workers, training innovative spirit of the labor, being more efficiency and increase labor productivity. It will reform the production structures by conserve resources, create new materials, and thus meet sustainable economic growth.
In recent research literature (e.g. Aghion et al., 2005) competitiveness on the product market has been identified – among others – as one of the main incentives for firms to increase their investments in R&D. Uppenberg (2009) provides a brief explanation: Companies aim at setting themselves apart from competitors in terms of price or quality of the product to… Read more
In recent research literature (e.g. Aghion et al., 2005) competitiveness on the product market has been identified – among others – as one of the main incentives for firms to increase their investments in R&D. Uppenberg (2009) provides a brief explanation: Companies aim at setting themselves apart from competitors in terms of price or quality of the product to gain market power or simply to retain at least some rents. This is called the “escape competition” effect (Aghion) which becomes especially import in so-called “neck-and-neck” industries – a branch with firms on a comparable level of technology.
From this point of view I would like to emphasise Commitment 23 from the list of key initiatives published by the European Commission in October 2010. Its basic intention is to redefine the role of standardization agreements between two or more firms with simultaneous consideration of competition aspects. In my opinion this is an example of a successful implementation of theoretical results into practice.
Standardization agreements determine certain product characteristics of technical or qualitative nature. This leads to a substantial increase in the comparability and makes it easy for the consumer to substitute one good for another. Increased consumer choice and rising competitive constraints could eventually cause lower prices. Furthermore, consumers benefit from network effects, meaning that the group of people using the same product grows steadily. Taking this into account, it becomes quite obvious that enhanced investments in R&D act an essential part in order to remain competitive. But, apart from this, it appears to me not just essential for survival but also worth doing: A slight reduction below competitors’ price enables the firm to gain from a significant increase in market power.
On the other hand standardization agreements could give rise to competition law concerns – and this is the very tricky part of the Commission’s proposal. One can easily imagine that involved firms try to use such agreements to manipulate prices or the amount of output. Moreover standardization goes hand in hand with a reduction in the variety of products. Another point I’d like to mention in this context is the great danger of setting a standard of technology that includes somebody’s Intellectual Property Rights (IPR). This person would become immediately some kind of gatekeeper for the entire market, deciding on entry and exit of other firms.
To sum up, I have no doubt, that Commitment 23 is one of the most ambitious and promising goals of the European Commission. Promoting incentives to invest through a strong competitive environment seems to reflect best what research has found out in theory. Nevertheless, one has to be aware of the possible negative outcomes of this extremely risky approach. Instead of increasing incentives for firms to invest one can easily create situations which hamper investments.
According to the website “ScienceDebate.org”, more than half of the growth in the United States since the end of WWII is due to breakthroughs in science and technology. If the two presidential candidates are aware of the importance of innovation in the growth of the U.S. economy, their proposals on innovation policy are radically opposed. This is what is apparent… Read more
According to the website “ScienceDebate.org”, more than half of the growth in the United States since the end of WWII is due to breakthroughs in science and technology. If the two presidential candidates are aware of the importance of innovation in the growth of the U.S. economy, their proposals on innovation policy are radically opposed. This is what is apparent from the answers given by both sides to the questions “on some of the biggest scientific and technological challenges facing the U.S.”.
While Barack Obama advocates an interventionist policy of the state by strengthening the financing of government agencies responsible for science and technology and promises to invest in science education in the United States (with the goal of “forming” and recruiting and 100 00 science and math teachers for years to come), the Mitt Romney’s party put on a policy of free enterprise in the field of research and easing regulatory procedures.
I will focus here on a particular measure of President Barack Obama, perhaps the most important since the beginning of his nomination in 2008. This is the “American Recovery and Reinvestment Act of 2009.” This recovery plan of the U.S. economy aims at fostering economic activity and growth in the long-term. And it’s mostly based on stimulating innovation through the support of research efforts: the Obama Administration has released no less than $8,9 billion to fund research, an impressive sum which was divided among several government agencies ($3 billion for the “National Science Foundation”, $2 billion for the “United States Department of Energy”, …) and academic research centers ($1,3 billion). (For more information about “Recovery Act”, see : http://www.recovery.gov/About/Pages/The_Act.aspx)
Despite mixed economic results, if there is one thing on which we cannot blame the mandate of Barack Obama is that he is consistent in its policy of innovation. Indeed, proposals for its 2012 election campaign are a continuity of what he has begun to undertake with the “Recovery Act”:
The first question on “ScienceDebate.org” about Innovation and the Economy, Obama answered he intended to double “funding for key research agencies in order to support scientists and entrepreneurs so that we could preserve America’s place as the world leader in innovation, and strengthen U.S. leadership in the 21st century’s high-tech knowledge-based economy.”
To remain the world leader in innovation? In order to be competitive against emerging powers, the outgoing President makes it a central point in his candidacy. Unlike his rival that he proposes to reduce the budget for investments for the future in areas such as research, education, health and the energy.
Until now, through the action plans of the “Recovery Act”, $100 million has been invested to support innovation in strategic sectors such as, education and training, health, information technology, and clean energy. Obama declared that of the $100 million, $90 million were invested in clean energy and expected a return of $150 million. He finished by saying that it is “the largest investment in clean energy in the American history”. And the investment covers not only research but also the implementation of these new technologies.
And I want to emphasize on this last point. As stated at a conference, Michael Dell, the founder and CEO of Dell, “innovate, it’s easy. It is more difficult to transform innovation into a real business.” The research and development are very important… such as the ability to implement the product of this research into the market. Although the project of Democrats for stimulating innovation is built on good basis, I think they could develop more action plans to facilitate an efficient implementation for all the research (and not only for clean energy projects).
Finally, if re-elected for a second term on November 6, President Obama and his Administration promise to continue investing in innovation. Ultimately, they hope to invest more than 3% of GDP in public and private R&D. While the country has one of the biggest crises of its history and they would still need to obtain the approval of the legislative power for the budget, will this current economic climate allow them to hold on their promises?
Based on the policy measures proposed by Barack Obama in the Strategy for American Innovation published on the 4th of February 2011, I wish to focus on the importance of sustainable energy investments in a long-term perspective. Sustainable development is by definition long-term, as it aims to meet the needs today’s generation while preserving the environment for future generations. The… Read more
Based on the policy measures proposed by Barack Obama in the Strategy for American Innovation published on the 4th of February 2011, I wish to focus on the importance of sustainable energy investments in a long-term perspective. Sustainable development is by definition long-term, as it aims to meet the needs today’s generation while preserving the environment for future generations. The US accounts for 18% of the world’s total carbon dioxide emissions. Although there are different opinions about the danger of Co2 emissions, more or less all scientists agree on the fact that the earth is getting warmer. As this is not sustainable, there is a need to invest in innovative projects that will help reduce Co2 emissions.
President Obama proposes what he calls a Clean Energy Revolution. As one of the largest energy consumers in the world, his goal is that the 80 percent of US electricity is generated by clean energy sources by 2035. The goal is impressive. It will require a significant change in the American energy consumption. Because of the position the US holds in the world economy, their acts may trigger other countries to follow their lead. But as far as I can see, Obama may face difficulties with the implementation of this plan. First of all, I do not think the companies are given the right incentives to start using clean energy. Second, the definition of clean energy in Obama’s plans does not mean renewable energy, and may not be sustainable.
A well-known tool in economics for making someone do what you want is to give them incentives. If the government wants to increase the use and supply of renewable energy they have to invest larger shares in renewable energy. But they also depend on private investors doing the same. They need to give investors an incentive to invest in renewable energy projects instead of fossil fuel. A study by Environmental Law Institute shows that the federal government provide substantially larger subsidies to fossil fuels than to renewable energy, mostly through tax deductions. Oil companies can deduct more or less all their costs related to oil exploration and drilling, which makes it relatively more attractive to produce oil than renewable energy. As long as the government hangs on to this old practice, investors are given no incentives to switch to renewable energy. There will of course be higher costs related to investing in renewable energy than oil exploration, but I believe the government need to give the investors a greater incentive to make them prefer renewable energy projects. Obama already suggested cutting the subsidies to the oil companies, but the republicans rejected the suggestion. Obama will have to continue trying to remove the tax deduction, or he can increase the subsidies for renewable energy so that it becomes as attractive as oil investments. The US is already in deep debt and will have to carefully prioritize their investments. That is why I believe it is important to give investors incentives that make them indifferent between investing in fossil fuel or clean energy.
Furthermore, although Obama states that he will focus on clean energy sources, several people raise the question whether all of these sources are actually clean. It is important to distinguish between Clean Energy and renewable energy. The term “Clean Energy Sources” includes clean coal and natural gas while renewable includes sources like solar and wind power. Natural gas is seen as a risk-free solution to the American dependency on foreign energy (propublica.org), but research shows that they drilling can cause hidden environmental costs.
I cherish Obama’s focus on clean energy and I believe the goals are possible to achieve if investors are given the right incentives to provide financial support to innovative projects. But in terms of sustainability, it will require more research on whether natural gas and clean coal is actually clean or if it is just a semi-productive strategy.
I want to offer my point of view regarding the initiatives proposed by the European Commission, focusing on “Spreading the benefits of innovation across the Union”.
This initiative concentrates on 2 main issues:
1. Member States should considerably improve their use of existing Structural Funds for research & innovation projects, helping people to acquire the necessary skills, improving the performance of national systems… Read more
I want to offer my point of view regarding the initiatives proposed by the European Commission, focusing on “Spreading the benefits of innovation across the Union”.
This initiative concentrates on 2 main issues:
1. Member States should considerably improve their use of existing Structural Funds for research & innovation projects, helping people to acquire the necessary skills, improving the performance of national systems and implementing smart specialisation strategies and trans-national projects.
2. Member States should initiate the preparation of post 2013 Structural Fund programmes with an increased focus on innovation and smart specialisation.
Basically, European Commission, through this initiative, is trying to encourage the member States to use a higher percent of the Structural Funds for R&D and innovation. A study made by KPMG on Structural Funds (http://www.kpmg.com/RO/en/IssuesAndInsights/ArticlesPublications/Press-releases/Documents/EU%20Funds%20in%20CEE%202011_KPMG.pdf) in countries from East and Central Europe shows that less than 10% of the funds are allocated for R&D and innovation. The real problem is that only about 50% or less of these funds have been contracted (not paid !!) by these countries. Furthermore, the average payment ratio for the structural funds in generally is about 20% ! So, some EU member states are finding very hard to absorb the funds.
One reason of a low percent of contracted ratio and a low payment ratio may be that the steps of how to contract Structural Funds are not very explicit for the population. Governments should struggle much more on explaining which are the steps, the requirements, and the risks.
One other problem may be the complicated process. Before wanting to focus the funds on a specific field, European Commission should simplify the contracting process. For example, in Romania, after you finished your project, you need a regional approval regarding the legibility of the project, after that a national one, and finally one from the European Commission. Thus, to avoid fraud there are three bodies which are doing the same thing. This structure of the process is slows the way to the expected result. For example, from the moment 0 when you finished your project and you have all the required papers till the moment 1 when the project is approved and the funds are absorbed, can pass more than a year. If we talk about R&D and innovation more than 1 year can be too much and you can lose your advantage. Of course, these are free money, but for a faster development companies may look for other sources of money. Basically, the long waiting for money can discourage.
Finally, in my opinion, the verification and acceptance process should be revised and modified to encourage the absorption of the funds, especially if you want to encourage the level of funds for R&D and innovation and the contraction and payment ratios. This is an area where time may be everything, and other sources of money, even if they are more expensive, could be preferred only because they are faster and the related profits can easily cover these costs.
With reference to the education reform policy proposed by U.S Presidential candidate Mitt Romney, where he speaks about supercharging America's current lagging K-12 education system and making its higher education more affordable for its students, I would like to offer several comments.
It is no doubt that innovation is not just about attracting top scientists, reducing R&D taxes and introducing regulations… Read more
With reference to the education reform policy proposed by U.S Presidential candidate Mitt Romney, where he speaks about supercharging America’s current lagging K-12 education system and making its higher education more affordable for its students, I would like to offer several comments.
It is no doubt that innovation is not just about attracting top scientists, reducing R&D taxes and introducing regulations to foster innovation. To create a culture of innovation which is sustainable, it starts from the heavy investment on human capital, which is what Mitt Romney proposed. However, this process will take many years before one can see the fruits of labour because it is about changing people’s mindsets, and creating a new generation of graduates who have the innovative mind.
This is not to say that the education reform policy is a one man show. It will work hand in hand with the other policies which he proposed, to finally make an observable difference many years down the road.
I would like to give my point of view about the Program that Barack Obama established for stimulating innovation.
“The Science, Technology, Engineering, and Mathematics (STEM) enterprise is the driving force for U.S. and global economic and social advancements”. The first workshop of STEM was held in october 2009.
This program is mainly based on teaching the new generation so that they… Read more
I would like to give my point of view about the Program that Barack Obama established for stimulating innovation.
“The Science, Technology, Engineering, and Mathematics (STEM) enterprise is the driving force for U.S. and global economic and social advancements”. The first workshop of STEM was held in october 2009.
This program is mainly based on teaching the new generation so that they can create an environment where invention, innovation and industry can flourish.
First of all, to lead to innovation, we first need to educate people because education is the fundament of life. When people have sufficient knowledge, they are able to invent and then to innovate in many sectors.
Secondly, as the world biggest economy, the U.S wants to maintain their leading position even though the economic crisis hit them a lot.
Moreover, in the Science debate, Obama spoke about his campaign “educate to innovate” which “is bringing together leading businesses, foundations, non-profits, and professional societies to improve STEM teaching and learning”. We can see that Obama, constantly emphasize the fact that education is a very important point for innovating and then help the economic growth.
To conclude, as a african, we don’t see innovation in our contries, because of a lack of education and therefore innovation. This plan (STEM) is valuable and to make it work it needs government support.
Thanks. It is also very interesting to have the point of view of developing countries.
Antoine Wouters
I would like to give my point of view about the program supported by the Democratic outgoing President, Barack Obama.
Innovation has always been one of the main drivers of the American economy and it is estimated that no less than half of the economic growth in the United States comes from scientific and technological progress. Now we are able to… Read more
I would like to give my point of view about the program supported by the Democratic outgoing President, Barack Obama.
Innovation has always been one of the main drivers of the American economy and it is estimated that no less than half of the economic growth in the United States comes from scientific and technological progress. Now we are able to better understand why issues related to innovation are very important in a campaign for the presidential election.
Barack Obama has decided to continue the United States’ current program, therefore continuing its projects in terms of financing innovation through research agencies. I think these agencies are essential to America so it remains a world leader in innovation, but that they should not be the only ones to be subsidized. Indeed, innovation doesn’t come only from big companies such as NASA, NSF, USDOE or different universities, instead it can come from smaller companies. So I think that these agencies recognized worldwide should be helped by smaller innovative companies which could reach dizzying heights. The best American example of an innovative success is undoubtedly Apple. In effect, this multinational corporation created in 1976 in a garage does not come from one of these agencies and is now the reference in innovative companies.
In summary, on one hand I think that free-enterprise is a good driver for innovation, and we should encourage it (give a variety of benefits to qualified persons wishing to innovate in United-States and to the firms concerned for example). In my opinion, the development of cooperation between public agencies and private companies could therefore be favorable to innovation.
On the other hand, Barack Obama wants to take the issue of innovation from the source and instead train 100,000 more teachers in science and math over the next 10 years. I think that this is an excellent measure for the innovation of tomorrow, beginning today. America will have highly qualified people in the coming years and innovation will be further promoted. Education is one of the most important drivers for the development of innovation and it is essential to encourage it.
First of all, it is worth mentioning the importance of I³S (Innovation Union Information and Intelligence System), the European Commission Platform, with the aim to inform about implementation of Innovation Union (IU) commitments. It allows the stakeholders (including EU member states, industries, residents, etc.) to get acquainted with the commitments and moreover, to benefit from reports when applicable in taking… Read more
First of all, it is worth mentioning the importance of I³S (Innovation Union Information and Intelligence System), the European Commission Platform, with the aim to inform about implementation of Innovation Union (IU) commitments. It allows the stakeholders (including EU member states, industries, residents, etc.) to get acquainted with the commitments and moreover, to benefit from reports when applicable in taking decisions. On the other hand, EC has to make sure information is frequently updated and promoted to the audience to stimulate its efficient use.
The 34 commitments addressed by IU are grouped within 13 types ranging from promoting excellence to creating single innovation market, measuring innovation progress and others. I would like to focus on Commitment 20 – Open Access to Research Results/Research Information Services:
“The Commission will promote open access to the results of publicly funded research. It will aim to make open access to publications the general principle for projects funded by the EU research Framework Programmes. The Commission will also support the development of smart research information services that are fully searchable and allow results from research projects to be easily accessed.” (http://i3s.ec.europa.eu/commitment/26.html)
The realization of this commitment would benefit public and private institutes in several ways:
– by providing overview of recent research in a given domain
– by providing access to empirical data as an input for on-going/future research
– by identification of researchers active in a given domain, thus stimulating cooperation
Making publicly available empirical data gathered from firms might not be in the interest of firms participating in data collection process. Thus, measures should be taken to ensure data confidentiality and still encourage firms to participate in publicly fund research.
Smart research information services enable different institutes, universities, governments, companies and individuals to seamlessly access for use, re-use and trust scientific information (http://i3s.ec.europa.eu/commitment/26.html, tab: implementation). It can become the portal to search for publicly funded research when used regularly and adopted by diverse public and private users. When portal usage together with user profiles (sector) are tracked and further ‘data mined’ rankings can be made to determine the research topic interests per industries (e.g. number of downloads and searches for a given topic). This could help to set priorities when publicly funding research projects.
The policy measure that I have chosen is: Promoting excellence in education and skills development, related to the issue linked to the growth of the Innovation Initiatives. It comes from the program proposed by the European Commission, called Communication Innovation Union and published on 6 October 2010. http://ec.europa.eu/research/innovation-union/index_en.cfm?pg=action-points
In this way, people will be better trained and researchers will be… Read more
The policy measure that I have chosen is: Promoting excellence in education and skills development, related to the issue linked to the growth of the Innovation Initiatives. It comes from the program proposed by the European Commission, called Communication Innovation Union and published on 6 October 2010. http://ec.europa.eu/research/innovation-union/index_en.cfm?pg=action-points
In this way, people will be better trained and researchers will be more competent. For example, universities should focus more on interdisciplinary and entrepreneurship. There are already some programs that promote this at UCL.
It should also promote e-skills, because internet takes pride of place increasingly important nowadays. For example, it can be based on partnerships with stakeholders or through university lectures. The level of e-skills in Belgium compared to other countries is good, but it is possible to do better. Norway ranks first. http://i3s.ec.europa.eu/commitment/4.html Knowledge exchange between the two countries could be a solution. In addition to exchanges between countries, there may also exchange of knowledge between researchers and people who work in companies for example. This would increase the knowledge base
.
To summarize, I find that this policy is very important because education plays a major role in everyday life. The development of knowledge can only be beneficial to innovate.
Hopefully, the cours ‘Economics of innovation’ contributes to the kind of policy you have in mind.
Sias Massimo
With the reference to the declaration made by Barack Obama, I would like to react to that giving my own point of view. It goes without saying that the 21st century reaches a huge level of competitiveness between industries in this world of globalization. In this case, one of the best ways to stay in the race is to innovate.… Read more
With the reference to the declaration made by Barack Obama, I would like to react to that giving my own point of view. It goes without saying that the 21st century reaches a huge level of competitiveness between industries in this world of globalization. In this case, one of the best ways to stay in the race is to innovate. Indeed, innovation tends to increase economics growth and I see it like an endless fight between industries. I would like to emphasize this point. Innovation is not limited to continuous technological progress (for example: phone > smartphone > …) but it can also create new needs for the consumer. For instance, one of the best examples is the iPad. As we can read in an article (http://www.treehugger.com/gadgets/i-want-you-useless-ipad.html):
“The iPad is the epitome of the created want. It is a consumer product that fulfills no function that a laptop or smartphone cannot; and everyone who wants to buy an iPad already has one of those things. It is something that we never knew we wanted before, nor ever needed. Everyone knows this. Steve Jobs knew this more than any of us will ever know this.”
Another example is the introduction of social networks like Facebook in our society. Who could imagine ten years ago that it would become such a success?
In this case, innovation gives the chance to every single industry to flourish and become a world icon. Consequently, I see it as an endless war increasing economic growth that can’t be totally won by few big companies.
Barack Obama’s policy proposal on innovation:
President Barack Obama has ahead of the upcoming U.S. presidential election proposed policies that he hopes can ensure the creation of more jobs in the domestic manufacturing industries. The American economy has been in a downward trend for the last decade, and has of October 2012 accumulated a national debt of $16 trillion (1). Much… Read more
Barack Obama’s policy proposal on innovation:
President Barack Obama has ahead of the upcoming U.S. presidential election proposed policies that he hopes can ensure the creation of more jobs in the domestic manufacturing industries. The American economy has been in a downward trend for the last decade, and has of October 2012 accumulated a national debt of $16 trillion (1). Much of this downfall can be explained by the extremely cheap labor found in East-Asian countries, which has seen many American companies outsource their production from the U.S. This has left traditional American industries, like the car manufacturing industry, in a limbo, and for many industries it has been a question of “life or death”.
The American export, being a vital part of the American economy, has declined sharply the last couple of decades, and from 1984 to 2010, the American export has fallen from accounting for 12% to only 8.5% of the value of all merchandise traded worldwide (2). This is an alarming figure, and the American economy stands in front of a (r)evolution. And this (r)evolution starts with a total rebuilding of the American export, so it once again can come back to a competitive level.
On the website promoting the Obama campaign you can find the following text: “Manufacturing is an essential building block of our economy because it sparks innovation, generates higher-wage jobs, and strengthens entire communities. After declining for over a decade, the manufacturing sector has rebounded – led by President Obama’s rescue of the auto industry– and created half a million manufacturing jobs over the past 30 months. To build on this recovery, President Obama set a goal to create 1 million new manufacturing jobs by the end of 2016 and is working to double American exports over the next five years by promoting U.S. goods and removing trade barriers, expanding access to credit, and promoting strong growth.” (3)
So, first Obama highlights that manufacturing sparks innovation, and strengthens communities. One can ask the question if manufacturing really sparks innovation and strengthens the economy, or if it is the other way around that innovations create more manufacturing, and in that way strengthen the economy. My view is more in favor of the latter. So I think, in order for the American economy to get back on track, one must create jobs in innovative industries, so that you can create more jobs through increased manufacturing, and not simply believe that manufacturing sparks innovation.
Obama also highlights that he wants to double American exports by promoting U.S. goods. The reason for the steady decline in American exports over the last few decades can be partly be explained by two important factors; the change in the composition of world trade, and the fall in productivity (GDP) (2). In order for the American export to once again find a firm foothold, and compete with other leading manufacturing countries worldwide, they should look to the fairly recent boom of innovative high-tech practices in areas such as Silicon Valley/San Francisco Bay Area, and leverage on the advantage of the innovative environment that has been created there (4). Innovation will lead to new ways of using capital and labor that will make the American workers more productive. Higher productivity (GDP) through innovation can therefore help the American economy and the American export levels back to competitive levels.
However, I find Obama’s policy proposal extremely optimistic, and if he, given that he gets re-elected, is able to double the U.S. exports over the next five years, he will have done an extremely good job. But given the amount of debt the American economy has accumulated with Obama in office, and the American economy’s current general state, I do not think Obama, or any other candidate for that matter, will be able to reach figures as stated in Obama’s proposal in only five years. As already stated, the American economy needs an evolution, but it will be ignorant to think that it will be a quick fix.
Innovation is a two way process involving the generation of an idea and then converting the idea into a business to improve the quality of goods or services provided. Innovation thrives in a competitive environment and in turn, plays a key role in the achievement of such an environment. By virtue of its relationship with competitiveness,
innovation is said to be… Read more
Innovation is a two way process involving the generation of an idea and then converting the idea into a business to improve the quality of goods or services provided. Innovation thrives in a competitive environment and in turn, plays a key role in the achievement of such an environment. By virtue of its relationship with competitiveness,
innovation is said to be at the heart of economic growth. One of the best examples to support this well established fact is of Innovation in the Indian IT industry and the resulting growth of the Indian economy. Innovation in Indian IT industry is a result of sense of competition promoted by a number of policy initiatives including liberalization of policies for computer and electronics sector. The innovation and the sense of competition results in creation of new jobs. More and more innovative minds take up these jobs and further contribute to the growth of economy. However, as aptly stated by Mr. Sam Pitroda “If India needs to grow at 9 or 10 per cent, then we have to innovate in all areas and it should not be left to engineers alone”. In order to achieve India needs to replace the age-old processes that are not valid anymore. It needs to create an environment to encourage investment in RnD and it needs to provide money to those who have ideas but no seed capital.
Nowadays, innovation is such an important fact that must appear in all the candidatures for reaching any public office.
Moreover if the candidature is for being the new President of the USA, so that the President of the global economy leader. That is the case of Mitt Romney, the next candidate to the presidency of the USA versus the current President… Read more
Nowadays, innovation is such an important fact that must appear in all the candidatures for reaching any public office.
Moreover if the candidature is for being the new President of the USA, so that the President of the global economy leader. That is the case of Mitt Romney, the next candidate to the presidency of the USA versus the current President Barack Obama.
In the first point of Mitt Romney of his candidature that is about “Innovation and the economy” and he talks about innovation as the key to economic growth.
He has made a detailed economic plan about different topics for the improvement of the American economy, for instance: human capital, taxes regulation and trade. And the point that has really caught my attention is it trade.
I like that point because it talks about the defense of the intellectual property, which I think it is one of the most important things for innovation. If any entrepreneur is able to develop a great idea, people who will consume that idea have to pay for it because if not they will be stealing without paying property rights and attacking the purpose of innovation. If people steal to the others, people would stop having new ideas for innovate because they will not have any compensation.
I also agree with Romney in his aim of opening new markets and thereby creation of jobs for the Americans; I think it is a great initiative for prevent the unemployment in his country which is aimed to be the motor of the global economy.
Just for coming to a conclusion I would like to emphasize that i like the way this candidate wants an economic growth by the innovation and reaching the innovation through the effort and hard work of all Americans that together will create an efficient economic system leading to the most powerful economy all around the world.
Through the programs of the two candidates for the U.S. election, two opposed conceptions of the role of the state in financing innovation are debated. Although the candidates are both conscious of the importance of innovation in the U.S. economy, their plans for financing innovation are opposed. Barack Obama wants the federal state to continue. He proposes to support… Read more
Through the programs of the two candidates for the U.S. election, two opposed conceptions of the role of the state in financing innovation are debated. Although the candidates are both conscious of the importance of innovation in the U.S. economy, their plans for financing innovation are opposed. Barack Obama wants the federal state to continue. He proposes to support the efforts of research and innovation to encourage the influx of capitals in several strategic sectors. Besides, he also wants to improve education in the United States.
Otherwise, the program of the Republican candidate is based on entrepreneurship. To Mitt Romney the only driver of innovation in United States is free-enterprise. He wants to set up a tax incentive policy towards investors and requires a simplification of regulatory procedures. Moreover he desires to limit the powers of government and intends to minimize the state’s interventions in U.S. federal policy innovation. The main foundation of his program is the human aspect: M. Romney considers that the human factor is essential for improvement. Therefore he proposed a reform of the immigration procedures to facilitate the granting of visas for foreign workers highly qualified. He also proposes to allow a permanent resident status to economics students who got the U.S. certificate. This way, the United States could benefit from more young skilled workers in critical fields of the U.S. economy.
About the investment in research and development, even if research universities should be funded by the federal government, we must not forget the potential of private investors. Mitt Romney believes that private investors should not be replaced by the financing of certain innovative sectors by the State. According to the Republican candidate, the private sector is much more efficient that investments from the U.S. federal government. This is why free-enterprise must be from now on the locomotive of tomorrow’s innovation.
In my opinion, Mitt Romney’s conception on innovation policy could be promising. Indeed, the private sector often leads to better motivation among the employees. Workers are more responsive to financial results. However, this Republican plan leaves the social security on one side. I think that to push the economy forward we must motivate people’s initiative. For this end, it is beneficial to provide a boost for private entrepreneurs and the self-employed. Nevertheless, we must keep in mind a main worry, namely, the public health. A prosperous economy cannot be appreciated in the long term if it damages the health of the population.
To sum up, Mitt Romney suggests a clear break with the innovation policy pursued over the last five years by the President Obama. Remains to be seen what the U.S. parliament will do with these attractive proposals while the financial context and economics conditions are at their worst level.
In Mexico, from where I am, in the short term there is going to be a presidential change, and the elected president Enrique Peña Nieto said in a recent public meeting, that has the intention to increase the funds to Science, Technology and Innovation.
As he said, nowadays public investment in these fields represent only 0.4% of GDP, and his desire… Read more
In Mexico, from where I am, in the short term there is going to be a presidential change, and the elected president Enrique Peña Nieto said in a recent public meeting, that has the intention to increase the funds to Science, Technology and Innovation.
As he said, nowadays public investment in these fields represent only 0.4% of GDP, and his desire is to increase to 1% at a growing rate of 0.1% each year (in Mexico, presidential period last 6 years).
In my opinion this policy It is a good initiative for having the means to increase levels of innovation in the country, or at least to encourage the interest of the people, as there is currently a central agency in charge for this aim, the National Council of Science and Technology (CONACYT), which creates programs to encourage people to study master or doctoral degrees, or conducting research projects, but in my opinion, one factor that has direct influence on this, is the level of education in the country.
I think the institute currently has good programs, just that people are not interested in doing a PhD, or a research project because they have first to solve other type of issues.
But going back to the article published about the intention of the President, to increase investment in this area, is that unfortunately in my country there is a high level of corruption, according to the Corruption Perception Index, Mexico from 2002 to 2010 obtained scores from 3.1 to 3.6 on a scale of 0 to 10 (Transparency International), where 10 means least corrupt. This high level prevents all resources devoted to innovation really reach their final destination.
Nevertheless, I think it is a good initiative, but also it still need the validation of the Congress to become a reality.
My response is also related to the Program proposed by the European Commission published on october 6th 2010 (communication on innovation union). I refer to the 5th key initiative over Enhancing access to finance for innovative companies and more specifically point 10 : "put in place financial instruments to attract a major increase in private finance"
I would express my opinion… Read more
My response is also related to the Program proposed by the European Commission published on october 6th 2010 (communication on innovation union). I refer to the 5th key initiative over Enhancing access to finance for innovative companies and more specifically point 10 : “put in place financial instruments to attract a major increase in private finance”
I would express my opinion by taking an exemple:
Talking innovation Silicon valley can be taken as an modern reference. Nevertheless it is not perfection and it is useless to try to reproduce it perfectly. By analysing the successpoints of this erea -or phenomenon- the two most interesting advantages turn to be a wide academic environnement and an easy access to funding.
Focussing on the second point, most of the (embellished) success stories about Silicon valley start with young entrepreneurs with ideas that could get funded in order to launch their product and succeed in their entreprises. Those young entrepreneurs don’t have to convince their audience that they will succeed despite of the facts that they are young and inexperienced and that there are also a lot of risks. Investors are aware of it. In fact it is precisely the reason they are there.
This exemple illustrates a fundamental principle of innovation, the fact that two key actors play major roles: inventors with ideas and investors with a taste for innovation. None of them could go without the other.
Another exemple about this crucial relation is crowdfunding or kickstarter (www.kickstarter.com/) more specifically for innovation. The purpose of this platform is to enable investors to meet inventors and vice versa.
By the key initiative mentionned the EU tends to enhance financial support for startups and SME’s. By “putting in place financial instruments to attract a major increase in private finance” the Commission focusses on startups, fast growing firms, innovation project, … But at the same time the Commission focusses on “the European Investment Bank Group, national financial intermediaries and private investors”. This is globally the second key actor needed for innovation. Taking those two groups, “the proposals will ensure a high leverage effect, efficient management and simple access for businesses”, or enhence relations between each other.
My opinion is that among all the action points of the EU’s key initiatives, this is the most interresting one. Some might be more important as for exemple point 11:
“By 2012, the Commission will ensure that Venture Capital funds established in any Member State can function and invest freely in the EU (if necessary by adopting a new legislative regime). It will endeavour to eliminate any tax treatment unfavourable to cross-border activities”
Europe can not promote innovation globally accross the continent if Venture Capital funds can not move freely accross member states. But this is a sine qua non condition rather easely achievable and measurable.
Point 10 is spotting one of the most crucial parameter for inovation, the relation between inventors and investors, and by this program the Commission will improve it. The improvement is a long term policy rather than a short term achivable goal.
The presidential race in the United States has been marked by a broadening divergence in policy making between the two major presidential candidates: Incumbent President Barak Obama, a Democrat and Governor Mitt Romney, a Republican. However, in a recent debate (http://www.sciencedebate.org/debate12/) both have expressed the importance of innovation as part of economic growth.
The debate has focused on the macroeconomic level… Read more
The presidential race in the United States has been marked by a broadening divergence in policy making between the two major presidential candidates: Incumbent President Barak Obama, a Democrat and Governor Mitt Romney, a Republican. However, in a recent debate (http://www.sciencedebate.org/debate12/) both have expressed the importance of innovation as part of economic growth.
The debate has focused on the macroeconomic level and the importance of privately funded Research and Development (R&D) and publicly funded scientific research. In specific, Republicans have been very critical of the spending of more than $90 Billion in clean energy and the intervention of the government in R&D. However, to Obama, such spending will generate more that $150 billion in clean energy projects (http://www.sciencedebate.org/debate12/).
In a globalized world, more and more, competitive nations are pushing the technology frontier as they “tend to have R&D intensities” (Griffith, 2004)-while making profits. As such, it is imperative for the United States to continue with policies to promote innovation as other nations are in the process of catching-up. In this line, there is no doubt that public funded scientific research has been and should be an important contributor to innovation, although it has been argued that more than 50% of R&D comes from the private sector (Uppenberg 2009).
Republicans have demonized public investments as a policy failure. The special case of failure is –they say- the solar panel company: Solyndra. Solyndra has been selling solar panels as an initiative to promote the use of alternative energies. With certain success, Solyndra got big contracts with industries that were looking to work with cleaner energy. However, this success was ephemeral. Last year Solyndra filed for Chapter 11 of the U.S. Brankupcy Code (http://www.solyndra.com/2011/09/solyndra-suspends-operations-to-evaluate-reorganization-options/). But this means that publicly funded R&D is a failure? No. Where there has been sporadic failure, big gains have been achieved. As such, Solyndra’s contribution to the market of solar panels has been underestimated. Solyndra has contributed to the innovation of other similar firms in the technological frontier by an entry-exit competition (Aghion, 2005). There are also many learning’s from Solyndra’s failure. Some new ventures, like Solyndra, lack access to funds to sustain their R&D as they cannot compete with big firms. Also, firms lack a framework of policies that promote competition – which in turn would disable monopolistic firms from defeating entry ones.
A policy framework that ensures competition should be in place to promote growth. Likewise, government should continue with its different incentives to foster innovation such as subsidies, tax cuts or financing R&D.
Both candidates running for the presidency of the US are well-aware of the impact of innovation on future economic growth of the country, and both of them constitued a tight agenda in order to nurture it and be the most innovative nation once again. Of course their ideas and priorities diverge.
(Market) Regulation policies can evidently spur innovation, and among those,… Read more
Both candidates running for the presidency of the US are well-aware of the impact of innovation on future economic growth of the country, and both of them constitued a tight agenda in order to nurture it and be the most innovative nation once again. Of course their ideas and priorities diverge.
(Market) Regulation policies can evidently spur innovation, and among those, the REINS (Regulation from the Executive In Need of Scrutiny) act comes off as a strongly contraversial policy. Romney props it up while the Obama administration is against it. The REINS act simply stipulates that the Chamber of Congress could have a say in every “major” decision concerning the economy, but not only. In other words: any economic decision based on scientific expertise could find itself rejected by the Congress for political reasons.
We know that incentives to innovate might come from the fact that competition in a certain market is sustained. According to Schumpeter (and our first Problem Set!), a monopoly which has high levels of internal funds has the ability to invest in its R&D, but in order to do so it is necessary for it to feel threatened by other firms entering the market (a monopoly doesn’t want to get toppled). Eventually, according to Schumpeter, the monopoly will get dethrowned in the long-term by an other firm which has done a technological breakthrough, this is called the process of creative destruction and would explain why innovation spurs growth. I strongly believe that implementing the REINS act would give too much power to people in the Congress (who obviously lack expertise) in the ability to influence markets, and therefore hinder competition aswell as innovation. I stand by this opinion because of the (known) fact that lobbies in the US of America are strong, and through “revolving doors”, good market decisions could be prevented. I would support Obama on this policy, and reject it, while increasing incentives for entrepreneurs to set up start-ups, which not only will raise competition, but lower the unemployment rate aswell.
As we have seen during the previous recession, manufacturing is one of the sectors helping to lead the recovery. And as everyone knows, manufacturing is driven by the innovation and technological advance.
Refering to US President’s speech on March 9, 2012 in Petersburg (Virginia), innovation is essential in order tu support the economy growth and to get rid of… Read more
As we have seen during the previous recession, manufacturing is one of the sectors helping to lead the recovery. And as everyone knows, manufacturing is driven by the innovation and technological advance.
Refering to US President’s speech on March 9, 2012 in Petersburg (Virginia), innovation is essential in order tu support the economy growth and to get rid of the financial crisis that started a few years ago. By investing $45 million in a program called « Advanced Manufacturing Partnership » dedicated to encourage innovation through a stronger collaboration between government and industry, Barack Obama’s message was very clear : he wants « the most advanced engineering schools to collaborate on new ideas, new technology, new methods, new processes ».
I am deeply convinced the President Obama in on the right way by betting on young talent to revitalize the economy. To illustrate my point, let’s remind one of the quotes of the founder of the current biggest company in the world : « Innovation has nothing to do with how many R&D dollars you have. It’s not about money. It’s about the people you have, how you’re led, and how much you get it ». By collaboring with the US best engineering school, it seems those two prominent men were, once again, on the same wavelength.
The « Green Tech » policy proposed by the president Barack Obama since his arrival in the White House reflects both how innovation in the field of energy is necessary for « moving forward » on economy (which is of course an issue of today’s generation) and how the beneficial effects of a long run decision are difficult to proove… Read more
The « Green Tech » policy proposed by the president Barack Obama since his arrival in the White House reflects both how innovation in the field of energy is necessary for « moving forward » on economy (which is of course an issue of today’s generation) and how the beneficial effects of a long run decision are difficult to proove the day before the elections.
Clean energy is an important topic of Barack Obama’s campaign. The aim of this policy is to allow the USA to have more control on its own energy (by developing American-made energy and by increasing the efficiency of those existant) and therefore to reduce the reliance on countries which produce petrol. We know that the future based on this relations is compromised because of the limited available ressources, the instability of political climate overthere and the associated increasing price. Growth in USA couldn’t occur (or with difficulty) in this conditions, energy is the fundation of today’s economy !
In response to his, huge investments have been made by the government in firms belonging to the energy sector in USA to develop fuel technologies and advanced vehicles. Moreover this policy tends to increase the employment (which is a factor of economic growth in a country). But as we saw during the Economics of Innovation’s lecture last week, investments in R&D are risky and not easily assessable…
Actual results of « Green Tech » policy are not very positif : lot of firms which have been helped by the governement went bankrupt and less new jobs than predicted were created. It’s a good opportunity for criticisms. But there isn’t any immediate solution to put the economy back on its feet after the crisis in 2008 on a sustainable way. Time is recquired to see the benefit of a such policy but adopting a long run vision is difficult when there is one month left before the elections !
I would like to give my opinion about one of the measures proposed by the Republican presidential candidate, Mitt Romney.
According to his answers about measures that can improve innovation (see: http://www.sciencedebate.org/debate12/), M. Romney wants to sustain the human capital flight (or brain drain) in the favor of the United States which is already the case. Indeed it's a phenomenon… Read more
I would like to give my opinion about one of the measures proposed by the Republican presidential candidate, Mitt Romney.
According to his answers about measures that can improve innovation (see: http://www.sciencedebate.org/debate12/), M. Romney wants to sustain the human capital flight (or brain drain) in the favor of the United States which is already the case. Indeed it’s a phenomenon where some of the best seachers and scientists of a certain country (often developing countries) emigrate to other countries where they can work in better shape (work and living conditions, earnings). By offering better conditions such as legal visa or permanent residence for the best foreign searchers or students, the USA would attract foreing searchers easier and they would maintain their economy at the top while also renewing their innovation potential.
That would be a huge boost to the US human capital but it can also create a more enormous gap between them and other countries who are trying to develop. Indeed, it’s hard for people out of developping countries to resist the appeal of the USA. Even the conditions in Europe are not as good as those offered in North America for research (according to Wikipédia, 40% of the most influencial French economists were expatriated in USA).
Furthermore, M. Romney wants to close off the American access to Chinese markets, fearing that China steals the intellectual property of American innovators. I think it’s a little regrettable because the Americans could also have learn something by working in Chinese markets even though the priority here is to protect their own intellectual property. And I also think is a little hypocritical to speak about other countries stealing their intellectual property since the USA are the country with the most emigrants seachers, including Chineses (only one fourth of the Chineses who went abroad to study or to teach came back to China).
My global opinion stands as follow. On an American point of view, it’s a great measure to maintain their position at the top of innovation and according to the importance of innovation, to contribute to their economy growth while unforcing their main competitors. In this electoral context, it’s of course what M. Romney is going for in order to convince the Americans. For the best foreign innovators, seachers and students, it’s also a huge opportuny to beneficiate those working conditions which wouldn’t be available if they stay in their native country .It can help them to develop their personnal knowledge.
But on a worldwide standpoint, isn’t it disturbing to see some countries (which represents a little amount of the world’s population) taking advantage of the knowledge while the developping countries don’t have a chance to retain their best seachers and therefore can’t develop themselves? Even us, Europeans, aren’t unaffected by the human capital flight. The gap between the biggest economical leaders and the others will continuosly increase.
The policy measure which I would like to discuss is the need to create a new innovation indicator. This is for me essential. Indeed, to be able to estimate and compare the level of innovation in our country, we must have a reference which show us if we are on the good way. The measurement of the level of … Read more
The policy measure which I would like to discuss is the need to create a new innovation indicator. This is for me essential. Indeed, to be able to estimate and compare the level of innovation in our country, we must have a reference which show us if we are on the good way. The measurement of the level of innovation in every compagnies will show us on what we must put the priority.
The most important point for me is that this indicator will be implemented in all Europe. The more people will use this indicator the more it will be easy to compare firms and countries in terms of innovation. We have seen with the crisis in Europe that some countries don’t have the same fit across Europe. The most famous example is the gap between Greece and Germany. An European indicator can objectivize this fit on an innovation point of view. This can lead to exchange of ideas between the “good” and the “bad” actors, and so increase the level of innovation in whole Europe. Indeed, we’ve seen that our future is linked; if the Europe is weak and divided, then it’s all of the European countries which suffer. That’s why we have to share our ideas and benchmark our result.
The benchmarking of the firms in Europe can tell us a lot about our economy, and with several kind of benchmarks we can see in which sector we have a lack of innovation and then put the effort on. For instance, some countries can be specialists in a specific domain and weak in an other one. So the benchmark between firms and sectors can also tell us something about the big measures which have to be decided.
The indicator will offer the oportunity to the politcs to take decisions being better informed than before, but it is clear that in the end the decisions won’t be the same in every country, depending on the governments and the specificity of each country. However, it will maybe be a good thing that the European government gives some advice to country to lead the entire Europe in a more or less same way.
The difficulty, for me, is to create such an indicator. Indeed, I think that with the big part of any indicators, there is sometimes a wrong reflect of the reallity. The GDP for instance, can’t define on is own the wellness of an economy. So, this new indicator have to be as close as possible of the real level of innovation.
To conclude, this is one of the first thing to do for me, create a new innovation indicator. To be able to measure and decide in an optimal way.
Referring to Mitt Romney’s policies for remaining the USA as a leader in innovation, Human Capital has caught my attention. The candidate defends the intention of attrackting and retaining the best trained and brightest students and workers from abroad. To achieve this goal he will raise visa caps for these desired foreigns and will give facilities and permanent residence to… Read more
Referring to Mitt Romney’s policies for remaining the USA as a leader in innovation, Human Capital has caught my attention. The candidate defends the intention of attrackting and retaining the best trained and brightest students and workers from abroad. To achieve this goal he will raise visa caps for these desired foreigns and will give facilities and permanent residence to students with high degrees.
I will like to give my opinion to this policy. The USA has a ver strict immigration policy. It is not easy for a foreign to obtain a permanent residence permit. I think that with the actual policies many potential workers and students are being lost by the USA and with them new companies, ideas and consequently innovation. I totally agree with Romney´s policy that will give the opportunity for many bright students to finish their studies in the USA and then probably work there providing innovation and growth to the country.
The USA is a very attracting country for young people with high expectations so the best thing this country can do to continue innovating is facilitate the entrance and permanence of them. To improve this policy i think that it is also important to mention scholarships. America has invest a lot of money in sholarships for high performance students athletes, but in my opinion a part of that money would have to be used to finance the studies and residence of those with high marks in mathematics, ciences and engineering.
In conclusion, Romney’s policy is the first step for developing a policy that will make the USA the home of the most promising students.
Here is my critical view on this: this policy is likely to increase the “brain drain” for other countries (i.e., bright students or graduates leaving their country of origin and not returning); is it fair to foster US economic growth at the expense of other countries’ growth?
Yousra Ebrahmi
For many years the U.S economy was the largest, most productive and most competitive economy in the world. However since the 21th century, some concerns were raised about its ability to remain in this preeminent position, indeed other economies (mainly in Asia) started to catch up with the U.S economy, in terms of education for instance.
Nowadays, in the context… Read more
For many years the U.S economy was the largest, most productive and most competitive economy in the world. However since the 21th century, some concerns were raised about its ability to remain in this preeminent position, indeed other economies (mainly in Asia) started to catch up with the U.S economy, in terms of education for instance.
Nowadays, in the context of global economic slowdown and financial crisis, these concerns are even more profound and according to a study about the Competitiveness and Innovative Capacity of the United States “innovation appears more and more as the key driver of competitiveness, wage and job growth, and long-term economic growth”. Innovation is seen as the way out of the crisis.
In his Plan for Jobs and Economic Growth, Governor Romney proposes a 5% cut in non-defense Research and Development from the fiscal year (FY) 2012 level. Governor Romney’s position about innovation is contradictory: he highlights the key role of innovation in job creation and economic growth but at the same time, he plans to reduce the federal investment in non-defense R&D. In many ways, this measure does not seem to be the solution to foster innovation:
• R&D is one of the factors affecting economic growth, indeed, R&D plays an important effect on productivity increase and it seems that the U.S may be under-investing in particular types of R&D in the civilian sector of the economy that present high estimated marginal rates of return from R&D. (Mansfield E. 1972. Contribution of R&D to economic growth in the United States. Science 175: 477–486)
• In a report conducted by ITIF ( The Information and Technology Foundation) “Comparing the 2012 Presidential Candidates’ Technology and Innovation Policies”, the authors show that in the period 1995-2008, due to a slowdown in federal R&D investment, the US have known a substantially slower growth rate in terms of R&D intensity that other countries. Knowing this fact, Mitt Romney’s measure seems to address even less the current needs.
• Nowadays, one of the most problematic sector in the U.S is the manufacturing sector, it stills remain a vital part of the U.S economy even thought it has been hit hard by fierce competitions, mainly from Asia. For this sector to remain competitive, the U.S need to try to put in place better technology and that goes in pair with an easier access to federal R&D funding.
It must be said that innovation is a long process; it involves a first stage of large losses, and of course in the current context of economic slowdown, some governments choose to cut their investment in R&D in order to focus on short term issues.
In conclusion, creating an environment suitable for innovation should be combined with creating incentives for innovative companies to remain in the U.S and to base there a large part of their designing, manufacturing, operating … processes.
With reference to the Innovation Strategy fronted by Barack Obama in 2009 (now updated for the 2012 electoral campaign), I would like to comment on one of the building-block actions set in order to spur economic growth and innovation in the USA.
The policy measure I would like to comment in this manner, is the one that encompasses physical infrastructure, more… Read more
With reference to the Innovation Strategy fronted by Barack Obama in 2009 (now updated for the 2012 electoral campaign), I would like to comment on one of the building-block actions set in order to spur economic growth and innovation in the USA.
The policy measure I would like to comment in this manner, is the one that encompasses physical infrastructure, more specifically how Obama aims to build a leading 21st century physical infrastructure in the USA. (See: http://www.whitehouse.gov/innovation/strategy/appendix-a)
In brief, Obama seeks to achieve this by:
1. Investing in high speed rail-projects across the USA, with the ultimate goal of connecting 80% of Americans to the high-speed rail systems within 25 years.
(He proposed to spend $56bn in January 2011. So far, $10bn has been approved.)
2. Increase the efficiency of air traffic control. This will be done by increasing the funding for the NextGen program, an ongoing transformation of the National Airspace System.
3. Establishing a National Infrastructure Investment Bank, with the main function of leveraging investments in infrastructure projects with the highest national priority. This bank will be open to private, state and local dollars to complete projects more efficiently.
Historically, infrastructure has played a crucial role in increasing economic growth and innovation worldwide. However, there are still several reasons for why I believe infrastructure itself can be a catalyst for innovation also in the future.
Firstly, commerce is made even more efficient. A quicker, safer and cheaper (in the means of marginal costs) way of transporting people and goods will benefit both businesses and consumers. For consumers, this will give them higher utility in the way that they now can search for an increased amount of products or services for the same price, or save time and money by sticking to their prior option. For businesses, reduced time and costs of transportation may increase their sales territory. For some firms, this may actually open up for export possibilities, making it possible to sell in new markets. For potential start-up companies, a bigger customer reach may be exactly what is needed to become a profitable establishment.
Secondly, big investments in up-to-the-minute infrastructure will drive innovation by creating jobs that revolves around green and sustainable communications systems, such as high-speed rails, renewable energy, smart grids etc.
There are also several micro-economic aspects by investing in sustainable infrastructure which I believe will provide a solid basis for innovation. For instance better railroads may reduce the amount of cars commuting in and out of the cities. This will in turn reduce the amount of traffic jams during rush hour, which creates a huge societal cost (i.e. the inefficiency of waiting – (1) no production of goods and services and (2) less utility for passengers by waiting in traffic jams). I believe the same reasoning can be applied to delays in the air traffic as well, something which the NextGen-project seeks to minimize. This inefficiency on the roads alone is calculated to cost American commuters $100 billion each year, so it is definitely not to be ignored.
Another valid point is that fewer cars on the roads and less traffic jams in turn will reduce air pollution in the cities and all the negative externalities deriving from this. (Health issues, EHS-actions, extra fuel costs etc.). Fewer cars on the roads may also reduce traffic collisions and traffic deaths. These latter effects are very hard to measure and are for that reason often left out of the equation when calculating future profits of infrastructure investments. Another interesting question is: What is really the lifespan of a state of the art, high-speed railroad? Some of the tracks built in the late 1800s are still in use today, and with recent technology and proper maintenance, for sure the returns on investments from high-speed rail projects may be greatly underestimated.
For the USA, which now rank as number 24 when it comes to having the best infrastructure in the world (2012-list made by World Economic Forum) (See: http://business.time.com/2012/06/15/failing-u-s-transportation-infrastructure/), improved infrastructure is a key priority in order to attract companies and raise the economy. California has already approved a $98 billion dollar project due 2033 to create the first regional express bullet train in the USA. This will cut the trip from Los Angeles to San Francisco to 2 hours and 38 minutes instead of a 6 hours drive, and at the same time, the project is expected to create 100.000 jobs. With an increased funding on state level, and establishing a national infrastructure investment bank to reduce the bureaucracy and administrative costs in financing, I am sure more of these innovative high-speed rails projects will come to surface in the near future as well.
Of course, investing in infrastructure comes with a price. Huge infrastructure investments cost an enormous amount of money, and for a country with $16 trillion in public debt, it may seem irrational to spend tens of billions of dollars on high speed rail investments now. However, in the long run, I believe a well-functioning infrastructure is essential for attracting innovative companies to the USA. By saying that the USA should build a leading 21st century infrastructure, Obama is shooting for the moon, but I believe his policy measures are on the right track to at least get a little bit closer. And by investing in infrastructure projects based on demand and population growth (which the National Infrastructure Investment Bank seeks to do), and not by political lobbyism, I believe the investments will pay off in the long run. Not 10 years from now, perhaps not even 20, but in 30 years or more. By not investing now, their infrastructure will deteriorate even further, making it even less attractive for innovative companies to establish. So to turn the criticism upside down, can the USA afford not to?
I opted for Barack Obama’s Innovation Strategy (http://www.whitehouse.gov/innovation/strategy/executive-summary).
Nowadays, we are in the situation where the markets are under pressure, saturated and the competitiveness is tough. The only way to distinguish ourselves from others countries is to innovate and improve the quality of our equipments, our products and services. In other words, innovation is the solution to stay competitive and… Read more
Nowadays, we are in the situation where the markets are under pressure, saturated and the competitiveness is tough. The only way to distinguish ourselves from others countries is to innovate and improve the quality of our equipments, our products and services. In other words, innovation is the solution to stay competitive and to face the crisis.
My attention has been drawn to three points in particular which are the most relevant to me.
In his strategy, Obama talks about clean energy technologies. By investing in such technologies, we could create more jobs and by this way increase the economy’s growth. Furthermore, it respects the environment which is an important subject in our modern society. In my view, it is the key solution because the resources get exhausted and the clean energies are the best alternatives.
A priority of Obama’s Innovation Strategy is to create a favourable environment for innovation for the US business in order to promote the entrepreneurship. I think this is an important point because firms need a healthy environment to be able to innovate and create. Moreover if our competitors invest in innovation, it forces us to also innovate otherwise we will be excluded of the market.
About the education, we must educate young people by encouraging them to think different. People have to be unique and original to succeed in innovation. If we want to create new ideas, we need to be different.
Obama focuses on high school level. But in my opinion we should involve innovation from a very early age.
In my point of view, the innovation must occur in all levels of the society involving students, companies and also the government. This is probably the only way to have a real impact on the economy.
In conclusion, my vision of innovation is quite human oriented. I think that behind innovation there are people who create and this is where the government should invest in. By innovating, we increase the exchanges of the economy and we increase the economic growth.
I very much enjoyed reading your blog post Professor, yet I feel there is an elephant in the room that must be approached before diving in to the complexity of innovation in the world of politics. Innovation is by its very nature a fragile concept. It is used fast and loose as if to represent a metaphysical growth factor that… Read more
I very much enjoyed reading your blog post Professor, yet I feel there is an elephant in the room that must be approached before diving in to the complexity of innovation in the world of politics. Innovation is by its very nature a fragile concept. It is used fast and loose as if to represent a metaphysical growth factor that inexplicably boosts the economy. In other words it is viewed as ‘the more money you spit in the more innovation you get’. When Presidential Candidate Mitt Romney for example says: “three-quarters of the U.S. productivity advantage over other OECD nations is directly attributable to innovation…”, what exactly is he referring to? If it is simply all technological advances then I suggest that the projection of the innovation discourse has to be altered.
Setting the stage
Up till the 1990s the discussion on regulation vs. innovation was focused around the need for innovation or the need for welfare. Increasing regulation would (back then) surely mean less optimization thus less money for R&D and ultimately less innovation. The counter-argument for this chain of events being that regulation is needed to ensure the welfare of citizens. In 1995 Michael Porter presented the Porter Hypothesis (Porter:1995) which hypothesized that regulation can lead to more innovations. A good example of this is Vestas the Danish windmill producer, Velux the Danish window producer or Danfoss the Danish filtering producer, all respectively at the top of their industries. A lot of Danish examples I admit, which only underlines my point as Denmark has one of the most regulated private markets in the Western society.
The Presidential Candidates “Once we rid ourselves of traditional thinking we can get on with creating the future.” – James Bertrand
The above quote does quite well to encapsulate the exact opposing polls of the American president-elects. On the one side we have President Barack Obama arguing a very future oriented discourse emphasizing the new America and what can be achieved by creating a new economy. On the other side we have Mitt Romney arguing past and present statistics that emphasize the importance of innovation for the current state of affairs.
The Policy
In The Information Technology and Innovation Foundation’s (ITIF) article: “Comparing the 2012 Presidential Candidates’ Technology and Innovation Policies” a certain comparison awoke an interest in me, under the comparative point called: “General Approach to Energy Policy”, Obama’s approach is presented like such: “Promote a national energy strategy that significantly supports the transition from fossil fuels to clean energy sources…”. Mitt Romney’s is presented as follows: “Develop a national energy strategy that increases domestic energy production and achieves “North American” energy independence by 2020, primarily through significantly expanded fossil fuel extraction and production in areas including those supported by President Obama as well as the Arctic National Wildlife Refuge and the Pacific coast…”
Renewable energy is arguably one of the biggest innovative ventures of the world yet its substitutes (fossil fuels) are so enveloped in financial and political incentives that regulative structures are needed to break the frame of ‘traditional thinking’. I admire Mitt Romney for trusting the American market to reach a sudden realization by itself though I do not see it as very likely. This current problem is exactly where Porters Hypothesis can be a beneficial new addition to the discourse of innovation. I do not offer any solutions in what I have just presented, purely a reconsideration of how we view the next steps that need to be taken in order to ‘let our innovations run wild’.
As asked the first assignment, I chose to give my opinion on the program of the U.S. presidential candidate, Mitt Romney (website: http://www.sciencedebate.org/debate12/). The point of the program on which I will focus is the promotion of a better education in the United States.
In my opinion, this point is quite relevant because it seems that education is a key area… Read more
As asked the first assignment, I chose to give my opinion on the program of the U.S. presidential candidate, Mitt Romney (website: http://www.sciencedebate.org/debate12/). The point of the program on which I will focus is the promotion of a better education in the United States.
In my opinion, this point is quite relevant because it seems that education is a key area for a “healthy” nation. Better education leads to improvements in both social and economic area.
There seems to be a link between better educated population and the propensity to innovate. Indeed, a better access to education could increase the number of qualified inventors. However, in the United States, the registration fees are astronomical and higher education is out of reach for a portion of the population. In addition, some people are forced to choose universities where the education level is not as high as those to which they could apply if they had more money.
Mitt Romney suggests drawing from federal taxes to provide financial assistance to students. I think this is a very good resolution but are there really enough government financial resources to give to a large number of people, access to education? Moreover, wouldn’t it be better to encourage students to be interested in the field of innovation? Indeed, if they choose to study literature or other fields unrelated to innovation, is an economic growth through an increase of innovation still possible?
Furthermore, this measure seems closely related to the point “Human Capital” of Mitt Romney’s program. The only difference is that it is aimed at the student / foreign workers. It is interesting to try to take advantage of globalization. Indeed, it seems more effective to think of growth through innovation from an international point of view.
Exchanging ideas between different innovators could be an advantage but on the other hand, it could also be a disadvantage. We can illustrate this by the example of China, which continues to create counterfeit and copy U.S. technology. Thus, as the United-States opens its education to foreign students it would be beneficial to find a way (other than the offering of a permanent residence) to “keep” its foreign graduates.
To sum up, I would say that I find the policy proposed by Mitt Romney quite interesting. It could permit a growth for the country in terms of innovation, but also from a social point of view. However, I find that the candidate should also take an interest in new energies (see the program of candidate Obama: http://www.whitehouse.gov/assets/documents/SEPT_20__Innovation_Whitepaper_FINAL.pdf) because it seems to me that this area is promising. There are many things undone that would be an advantage in terms of the environment and that would induce economic improvements.
I would like to base my point of view on one of one of the two presidential candidates: Mitt Romney. My answer is based on the articles: http://www.nature.com/news/obama-and-romney-tackle-14-top-science-questions-1.11355 ; http://www.sciencedebate.org/debate12/ ; and http://www.mittromney.com/issues/education.
Both candidates propose a lot of measures mainly focused on innovation: such as innovation and economy; climate change; Research and the future; Education; etc…
According to me, one… Read more
Both candidates propose a lot of measures mainly focused on innovation: such as innovation and economy; climate change; Research and the future; Education; etc…
According to me, one of the most important points that M. Romney suggested is the policy on what he called the “human capital”, which is a part of his detailed economic plan.
In his plan, he explained that the US have to be reformed on the immigration in order to keep the knowledge, “the best and the brightest”. According to him, “(…) Equip more Americans with the skills to succeed. I will raise visa caps for highly skilled foreign workers, offer permanent residence to foreign students graduating with advanced degrees in relevant fields, and restructure government retraining programs to empower individual workers and welcome private sector participation”.
From my point of view, I think that Mitt Romney wants to focus the America’s Human capital on knowledge and skills; which is according to me a good idea and is directly linked to the education’s part. On the contrary, I think that the US have to be focused on their own workers rather than on foreign workers by improving their skills.
I can’t agree more with my colleague Marta Ripamonti that the education is a strong way to develop a nation. Unfortunately, the education’s part remains a big challenge for the US. Indeed, even if the economy is based on science, technology,… the US students are ranked between the 23rd and the 31 rd. (respectively for science and maths). Despite a lot of governmental spending, the situation remains the same.
Mitt Romney’s solution for K-12 education is based on:
– Promoting choice and innovation: in order to give the possibility to students to choose their own way, with more options and possibilities;…
– Ensuring high Standards and Responsibility for Results: in order to ensure that they will be well-prepared for High School or for working life.
– Recruiting and Rewarding Great Teachers: with policies of recruitment, evaluation and compensation.
To conclude my answer, I would say that spending money on education is one of the most important things to do in the US in order to increase student’s skills and possibilities, which would lead to higher ranks for US students. But the money has to be invested intelligently. The aim of this spending is to offer a large range of studies’ choices. Students can thus choose what they want to do as studies and after. So they more easily will find a job which will be, at the end, a return on the initial investment and thus “avoid” loss of money for the US economy. We could see it as a “cycle”. The government spends money to create choices for students and those students/future workers will bring back some money.
With regard to Innovation Union – A Europe 2020 Initiative (see: http://ec.europa.eu/research/innovation-union/index_en.cfm?pg=action-points) I would like to evaluate the aim of Promoting Excellence in Education and Skills Development. The main target of this action point is having at least 40% of 30-34 years old people third level educated.
I agree with importance of education in terms of boosting human capital,… Read more
With regard to Innovation Union – A Europe 2020 Initiative (see: http://ec.europa.eu/research/innovation-union/index_en.cfm?pg=action-points) I would like to evaluate the aim of Promoting Excellence in Education and Skills Development. The main target of this action point is having at least 40% of 30-34 years old people third level educated.
I agree with importance of education in terms of boosting human capital, which is a significant part of the Solow residual (see: Theodore Schultz, Investment in Human Capital, The American Economic Review, March 1961) and one of the main drivers of economic growth.
I am convinced that the quality of education is at least of the same importance than the quantity of educated people in the society, therefore the quality is the objective requiring many improvements. According to QS Top University rankings 2012 (see: http://www.topuniversities.com/university-rankings/world-university-rankings) there are only 5 universities from the EU in the top 25 (all of them from UK) and according to ARWU rankings 2012 (see: http://www.shanghairanking.com/ARWU2012.html) there are only 4 universities in the top 25 (all of them from UK as well).
A group of Australian economists tried to find out main socioeconomic factors that stand behind success of US universities (see: Li, Shankhar and Tang, School of Economics Discussion Paper No. 391, June 2009, The University of Queensland). Using econometric methods, they discovered a significant importance of population, R&D expenditures and English like a predominant language (general united language).
In my opinion, the best way how to increase quality of universities in the EU is to establish a single market of education in the EU. The EU population overcomes the USA, so the EU single market is larger in size and with high R&D expenditures as well. If more English study programs were available on local universities and higher cooperation supported between academic institutions (joint research projects etc.), universities in the EU would become better and higher ranked and more competitive in comparison to universities in the USA and even catch up with them.
With universities of higher quality in the EU, less people would go study out of the EU area and more talented people would be incoming to the EU education system like a students or researchers.
I hope that this class, ‘Economics of Innovation’, taught in English, goes in the direction of your proposal 😉
Delphine Wauty
Two years ago the European Commission drew up a list of thirty initiatives intented to boost innovation in the European Union. Among those actions plans, one is aimed at fostering innovation by improving access to finance for innovative companies. I would like to give my opinion about the implementation by the European Union of financial instruments to increase private… Read more
Two years ago the European Commission drew up a list of thirty initiatives intented to boost innovation in the European Union. Among those actions plans, one is aimed at fostering innovation by improving access to finance for innovative companies. I would like to give my opinion about the implementation by the European Union of financial instruments to increase private finance.
First of all, according to José Manuel Barroso in his presentation to the European Council in February 2011, the difficult access to finance is one of the main problems the European Union has to deal with on the subject of innovation. Furthermore those issues are getting worse because of the financial crisis.
Therefore, for the period 2014-2020, the Commission has proposed to organise financial instruments such as the European Investment Bank Group in order to help companies in getting funds for research and innovation. The European Union budget should also help in financing firms with growth potential. The financial instruments vary according to the sector, how developed is the company – is it a start-up or a more established company? – the kind of innovation, etc. More details about those proposals can be found here : http://i3s.ec.europa.eu/commitment/14.html and http://i3s.ec.europa.eu/commitment/15.html .
In my opinion, improving the availability of funds for firms with innovative projects and growth potential is crucial. Indeed, what is the point of investing in education if companies are not financially able to do research afterwards and make their innovative ideas come true? Many firms have to give up on their projects because of a lack of funds and a reluctance from the banks to lend to smaller companies. That situation has become worse as the financial crisis has made the banks even more risk-averse. If the European Union is willing to invest in reseach and innovation, a better availability of finance is then a key action. By extension it should have a positive impact on growth.
Moreover, it is recommended for the European Union to spend more on R&D – in better finance access for firms or in education, amongst others – if the Union is willing to spend 3% of GDP on R&D by 2020. Indeed, the current share is only 2%, which is smaller than the American and Japanese ones although the European expenditures on R&D in real terms are only behind the USA. However, always in real terms, China might catch up with the EU by 2014. Thus it is important for the EU to invest more on R&D if it wants to remain competitive.
In conclusion, it is primordial to make easier access to finance for firms as many of them have innovative ideas but are not able to afford their realisation. Furthermore those expenditures on R&D should help the European Union to restore growth and remain competitive.
I agree with you. On this topic, see Marlon Braun’s comment about crowdfuding.
Aditya Ahluwalia
I would like to offer my views on "Spreading the benefits of innovation across the Union" (see: http://ec.europa.eu/research/innovation-union/index_en.cfm?pg=action-points ) which is one of the action points in the program proposed by the European Commission, called Communication on Innovation Union published on 6 October 2010. The reason why I chose this specific point was that this is one point which… Read more
I would like to offer my views on “Spreading the benefits of innovation across the Union” (see: http://ec.europa.eu/research/innovation-union/index_en.cfm?pg=action-points ) which is one of the action points in the program proposed by the European Commission, called Communication on Innovation Union published on 6 October 2010. The reason why I chose this specific point was that this is one point which can be very strongly compared with India which is a developing country and has just started to focus on innovation while the European Union is much more ahead in terms of recoginizing innovation as a key to economic growth.
As a student who has had a chance to explore and understand economic growth across different economies, I feel that it is of utmost importance to realize the benefits of innovation to motivate people to work in this direction. The structure in which the European Union decided to implement this action point and the thought process behind it is an excellent example for any country who is about to embark upon this path. The proposal for this action point came from the fact that the union despite allocating funds for innovation is not using them effectively. Comparing this with India the funds allocated are very small and effective utilization is even lesser. Another fact observed by the European Union was the difference in expenditure in innovation and ability to absorb it because of the ongoing financial crisis due to which the intensity of focus is different in different regions. Comparing this with India you have 28 states with different problems to put resources to and different mindsets and again the intensity and focus on innovation would not be the same due to which you observe varying levels of economic growth. The plan EU has, to address this is planning and implementing regional policies which is linked to trajectories laid down in the national reforms program. Again something which happens in India but is more focused on reducing social, territorial and economic disparities and not facilitating smart growth..
Thus the various steps laid down by the EU to implement the above objectives are infact just the next steps what India has to do. Thus I totally support the above action point which in true terms does spread the benefits and motivates all the members to drive growth using innovation. We in India first have to understand and experience the benefits to innovation to make and implement such kinds of policies. Thus I feel that we are exactly one step lower than the EU to make innovation work for us. Also we are just starting to realize the potential of innovation and the above article gives not just specific action action points but a very detailed perspective on how effectively synergise innovation to play a positive role in the economic development of a country or a region.
I would like to comment on the Innovation Union, initiated by the European Commission in 2010 to realize a vision of Europe in 2020 with “more jobs, improved lives and better society”.
One of the action points says “Focusing EU funding instruments on Innovation Union priorities”. The aim is to launch programs which focus on societal changes, streamline funding instruments, radically… Read more
I would like to comment on the Innovation Union, initiated by the European Commission in 2010 to realize a vision of Europe in 2020 with “more jobs, improved lives and better society”.
One of the action points says “Focusing EU funding instruments on Innovation Union priorities”. The aim is to launch programs which focus on societal changes, streamline funding instruments, radically simplified access and to design EU research and innovation programs.
In my opinion it is very important for Europe to have transnational research and development programs in order to face the challenge of rising international competition. In fact today’s challenges are very complex and can be a threat for Europe’s competitive position on the global stage.
Time has changed and from the beginning of the EU as European Coal and Steel Community with a later focus on agriculture and infrastructure we have to adapt to modern time and support an Innovation Union. The European budget should focus on investments, which help to stimulate sustainable growth in order to remain internationally competitive.
At the same time, continued fragmentation and lack of coordination in Europe hamper cross-national investments and research exchanges.
The EU should launch and support projects, which are innovative and not just prestigious. The Galileo project as a global navigation satellite system indicates difficulties and shortcomings of these projects (http://en.wikipedia.org/wiki/Galileo_%28satellite_navigation%29). As a result of huge administrative burdens and the fact that the project has to be located within different countries, private funding was not available and time had to be prolonged so that as a consequence costs have doubled.
In my opinion European rivalries have to stop so that we can support the best projects and investments instead of competing nationally for EU funds.
We have to keep in mind that innovation and economic growth cannot be imposed by the government, as the development of East and West Germany indicates. Even after 23 years of transferring around 60-70€ billion per year from one part to another, the GDP (71% of western level) and productivity of economy (80% of western level) are not the same (http:// faz.net/aktuell/wirtschaft/wirtschaftsforscher-osten-nicht-laenger-subventionieren-11663011.html).
This leads to my final conclusion, that research projects should have priority funding, but at the same time the investment has to fulfill certain criteria concerning effectiveness and sustainability.
I will discuss the regional policy of the European Union, an investment policy aiming at supporting job creation, competitiveness, economic growth, improved quality of life and sustainable development. This policy goes to the same direction as the Europe 2020 strategy, while focusing on less developed countries and regions.
For the period 2007-2013, the cohesion policy has been working on… Read more
I will discuss the regional policy of the European Union, an investment policy aiming at supporting job creation, competitiveness, economic growth, improved quality of life and sustainable development. This policy goes to the same direction as the Europe 2020 strategy, while focusing on less developed countries and regions.
For the period 2007-2013, the cohesion policy has been working on 3 main targets:
1. Convergence – solidarity among regions
2. Regional Competitiveness and Employment
3. European territorial cooperation
(http://ec.europa.eu/regional_policy/how/index_en.cfm#2 for more details)
Walloon Region (except the Hainaut province) is concerned with the 2nd target, and has implemented an Operational Programme (http://europe.wallonie.be/?q=node/12) in order to reach the objective, while being co-financed by the European Regional Development Fund (ERDF). The total budget amounts around to 720 million Euros, with 12.5% of the investments made by the ERDF.
One the 4 priorities set in this programme is called: Priority 2-Development of human capital, knowledge, know-how and research. This priority is devoted to the development and exploitation of research and technological innovation potential, non-technological innovation and the development of successful skills training infrastructures.
It intends to implement 4 measures in order to do so:
1. Support for technological advances of SMEs, encouraging cooperation between research centers and high education schools.
2. Strengthening approved research centers and the services subsequently made available to enterprises in the area;
3. Support to non-technological innovation
4. Creating effective infrastructures for the dissemination of knowledge associated with new technologies to the active population and young people.
I think that including this priority in order to improve regional competitiveness of Wallonia is very important. That region is indeed lacking behind other regions regarding its innovation, and its R&D sector is quite poor. Hence encouraging ties between research, technological advances and SMEs needs and demand is a smart initiative. Usually, those small companies have less budget and less means or tools to make technological progress, while it is necessary to stay competitive. Besides, showing via a regional programme the attention and investment done in the region is essential to attract even more investors while restoring confidence that competitiveness and employment will improve in the future.
However, the measures are not explicitly linked together, and from what appears to happen when looking at the projects funded, (http://ec.europa.eu/regional_policy/projects/stories/search.cfm?LAN=en&PAY=BE&the=ALL&type=ALL®ion=ALL). There is only 1 or 2 measures implemented in one same project. For example, one will focus only on education and training, while another will focus on R&D in one company. The education centers have to be tied to the research centers in order to provide most useful knowledge and know-how to young people.
Besides, It is important not only to support technological advances by providing new material to the stat-of-the art for research centers, but also to make sure that the economy (and specially here the SMEs) benefits from it. Knowledge transfer is to my opinion a key driver to competitiveness and economic growth. Innovation has to be made in useful sectors, adapted to the regional economy.
Hence, I would only consider the Priority 2 to be successful if there is a synergy between the different actors involved in each specific measure, so that strong competition can be maintained, with an environment supporting technological advance via research centers, skilled people and education infrastructures adapted to the regional market needs in order to benefit from those investments and contribute to economic growth.
I agree the proposition of Barack Obama about the education challenge. Indeed, I am persuaded that innovation is intimately linked to human resources quality. As innovation is a continuous and complex task, it needs to be regularly reinforced by highly skilled searchers. Nevertheless, I believe that this challenge will also need different soft skills. Not only math and science, but… Read more
I agree the proposition of Barack Obama about the education challenge. Indeed, I am persuaded that innovation is intimately linked to human resources quality. As innovation is a continuous and complex task, it needs to be regularly reinforced by highly skilled searchers. Nevertheless, I believe that this challenge will also need different soft skills. Not only math and science, but also economics and philosophy. Math and science mainly relate to technology. Economics and philosophy could develop an alternative way of innovate, consisting of rethink the use of existing technology.
The main idea of the European Commission’s policy “Europe 2020 strategy” is that we should invest in research and innovation to make sure that we have a clear idea of the origin from products and services that might drive our economic growth.
In the article, the European Commission declares that we are facing two issues: an ageing population and a… Read more
The main idea of the European Commission’s policy “Europe 2020 strategy” is that we should invest in research and innovation to make sure that we have a clear idea of the origin from products and services that might drive our economic growth.
In the article, the European Commission declares that we are facing two issues: an ageing population and a strong competitive pressure from globalization.
By this way it is very important to approve our capacity to create more jobs, to improve live conditions and build durable energy in order to meet the challenges of our society.
The “Innovation Union” is the solution to achieving these goals. The first thing that the Commission has decided to do is to invest 3% of EU GDP on research and development for industrial process and new services or products to create job and growth. This new investment should bring us to answer to the major issues of our society, such as economic growth, employment, climate change, the optimal use of energy and resources, public health and demographic changes.
According to the European Commission’s website: “The policies in the Innovation Union Plan aim to do three things:
• Make Europe into a world-class science performer;
• Revolutionize the way public and private sectors work together, notably through Innovation Partnerships;
• and remove bottlenecks – like expensive patenting, market fragmentation, slow standard setting and skill shortages – that currently prevent ideas getting quickly to market.”
From my point of view, it seems that boosting our innovation performance is the correct way for Europe to face competitive pressures, which come from globalization. One of the strength of Europe is the high level of education and so Europe should use it to develop innovative plans, like technical process, in order to create new jobs. This, in long-term, should push our economy.
Currently Europe has a good position on the word economy but we can observe that other countries, like South Korea and China, are catching up very fast. If we are just based on the current strategy of production, others countries that dispose more labor and also offer cheaper production cost will overtake us.
Thus, we can see that Europe can be in danger in the near future if it doesn’t innovate. Nowadays, Europe remains fragmented and insufficiently innovation-friendly. By the investment of 3% of EU GDP on research and development, the European Commission intends that the European market including publics and Privates Company should be able to meet the challenge of economic growth to enhance to quality of research, by creating a true European Research Area, which pools all the innovation efforts.
Over the last decade, communication as well as knowledge sharing mechanisms have changed drastically thanks to Google and social media engines such as Facebook, Linkedin etc. Most of these have been founded by American programmers and have enabled a paradigm shift for the world to gather knowledge. These platforms also display the network externality characteristic, a term coined by… Read more
Over the last decade, communication as well as knowledge sharing mechanisms have changed drastically thanks to Google and social media engines such as Facebook, Linkedin etc. Most of these have been founded by American programmers and have enabled a paradigm shift for the world to gather knowledge. These platforms also display the network externality characteristic, a term coined by economists, which simply means the personal utility of consuming a good increases as more and more people consume it. With such dynamic platforms it was interesting for me to note the take of the American presidential candidates on the issue of online privacy.
I felt Obama administration has a more holistic approach to the online privacy issue where it understands that this is a sphere where a law can be implemented only by including all stakeholders – consumers, data collection agencies and users of consumer data. The ‘ Consumer Privacy Bill of Rights’ introduced this February is the first step in this direction that seeks to at least give consumers the right to protect their personal data. What we, as consumers, also need to understand is that platforms such as Google, Facebook work on a ‘give and take’ mechanism and that these platforms are relevant to us to gather information only if they have an information database which in turn is built by gathering data from again, us consumers. Hence, I consider Obama’s take on it which includes all stakeholders more practically appropriate than Romney’s take which gives paramount importance to individual users.
It is also a dynamic legislation which would keep changing as the online platforms evolve but for today I regard consumer awareness about the information being tracked as highly important. So, in addition to introducing a bill what is also needed is a mechanism to track its effectiveness and monitor the online platforms and swiftly amend the bill. These platforms have enabled research by making knowledge gathering much simpler and hence a healthy balance between monitoring and growth of online platforms would be the key to further innovation.
After studying the US Presidential debate in detail, it would be right to say that both the presidential candidates concur to solow’s growth model and acknowledge the contribution and impact that innovation and technology has had on economic growth in the US. However both the candidates differ in their approach to bring about this economic growth as far as policy… Read more
After studying the US Presidential debate in detail, it would be right to say that both the presidential candidates concur to solow’s growth model and acknowledge the contribution and impact that innovation and technology has had on economic growth in the US. However both the candidates differ in their approach to bring about this economic growth as far as policy formation is concerned. In my view Mitt Romney in his speech has focused on improving broader fundamental framework conditions such as tax, trade, immigration, education, regulation etc. to promote innovation. One of the policy measures proposed by Mitt Romney that caught my attention was his proposal to raise the visa caps for highly skilled foreign workers. This topic is of relevance to not only U.S citizens but also several others who go to U.S for higher studies and jobs, fitting the relevant criterion.
U.S for long has succeeded in attracting scientific talent from all over the world. According to a 2011 study by the Partnership for a New American Economy the first-generation immigrants or their children have founder roles in more than 40% of the Fortune 500, which had combined revenues of greater than $4.2 trillion employing more than 10 million workers worldwide. But this very source of talent is now on a decline due to strict visa regulations and a number of other laws that the Obama administration implemented. This has hindered growth in innovation and technology sector, limiting the economic growth as well. So Mitt Romney policy to raise the cap for highly skilled foreign workers can prove to be beneficial for the economy as a whole.
However in my opinion Mitt Romney’s policy is a very short sighted one. Raising the cap might provide a temporary boost to technology and innovation sector, but is not a real solution for sustaining innovation and growth. The underlying issue of immigration will still persist. It will be interesting to see how long U.S can justify legalizing selective immigration. As Illinois Representative Luis Gutierrez said “Republicans are only willing to increase legal immigration for immigrants they want by eliminating legal immigration for immigrants they don’t want,”
I’d like to continue offering my point of view issued the innovation policy in the United States. I’ve taken a look at the President Obama’s Strategy for American Innovation, a document published in September 2009 and updated in February 2011 (see: http://www.whitehouse.gov/innovation/strategy ). In this document, Barack Obama describes the essential role of innovation in the U.S. past and… Read more
I’d like to continue offering my point of view issued the innovation policy in the United States. I’ve taken a look at the President Obama’s Strategy for American Innovation, a document published in September 2009 and updated in February 2011 (see: http://www.whitehouse.gov/innovation/strategy ). In this document, Barack Obama describes the essential role of innovation in the U.S. past and future prosperity, the central importance of the private sector as the engine of innovation, and the role of government in supporting our innovation system.
One highlighting point I would catch is the energy innovation. Barack Obama would like to promote a national energy strategy to transition from fossil fuels to renewable energy sources and he wants to continue tax breaks for renewable energy while eliminating subsidies for oil, natural gas and coal production.
Personally, I like to welcome this policy. Although the discussion about renewable energies is a permanent topic, it definitely promises growth. Finally, I think that innovations in this sector have to take place because fossil fuels running out of supplies the next 50 or 100 years. Other countries like Germany or China take a leading role. Especially China as the worldwide greatest solar cell manufacturer could achieve more growth.
Otherwise, this competitive environment and other economic circumstances, e.g. current developments on commodity markets, demand the right investments in the right companies and industries. As an example, the Obama administration’s 535 million dollar investment in the now-failed solar energy company Solyndra stifled innovation (see: http://en.wikipedia.org/wiki/Solyndra ). Focusing the market on a single company, investors cause to overlook investments in smaller competitors.
In my opinion, a national or regional research and innovation strategy including tools like SWOT analysis and monitoring systems could contribute to broad renewable energy mix. This leads to so-called regional industrial clusters or even industries with new energy concepts emerge.
When an economy is in recession such as some European Union countries, their government and their companies should invest more in some political innovation in order to try up the economy situation. But in order to begin developing what I think about this post, first I would have to say that the innovation in the economy isn´t be practice of… Read more
When an economy is in recession such as some European Union countries, their government and their companies should invest more in some political innovation in order to try up the economy situation. But in order to begin developing what I think about this post, first I would have to say that the innovation in the economy isn´t be practice of random form, so the privates and publics companies can´t developing an innovation theory or innovation company´s planning without firstly perform a market research.
They have to investigate about the economy´s situation of each country, try to know with the above market research what the economy and the society need.
Then is when the companies should aside part of his profits and invest this in Research and Development (R+D). This work is only possible with the big companies, so they get so many profits per year in order to invest in R+D.
This may be say us that the relations between the big private and the public companies would be able to be profitable. It is so important that the companies work together to get a better aim. Even, it would be able to perform more institutions about the innovation where the big companies of the European Union could contribute with his owns ideas and could work together. The results would be better if they work as a team.
I´m completely in accordance with Marta when she said that it would be important create some European funds in order to the collaboration between the companies aren´t be only on the same country but it could be in the all European Union.
Finally and to conclude this post, I believe that nowadays the world economy is constantly change, there are so many recession, so many crisis, (like Spain, Greece) on the other hand we can find another countries with a great economy, but what is evident is that all the countries (his companies and his governments) must looking for a way what they invest more in Research and Development because this is the future, this is the way in order to grow in the economy and the way to make a difference.
In the following, I will take position regarding Mitt Romney´s propositions on the ScienceDebate at September 4, 2012 (see: http://www.sciencedebate.org/debate12/), especially his statements about „Innovation and the Economy“.
According to Romney, the implementation of innovation should begin on Day One of his tenure, with focus on simplifying the corporate tax code, reform job retraining programs, reduce regulatory burdens and protect… Read more
In the following, I will take position regarding Mitt Romney´s propositions on the ScienceDebate at September 4, 2012 (see: http://www.sciencedebate.org/debate12/), especially his statements about „Innovation and the Economy“.
According to Romney, the implementation of innovation should begin on Day One of his tenure, with focus on simplifying the corporate tax code, reform job retraining programs, reduce regulatory burdens and protect American intellectual property. For that, a detailed plan with critical structural adjustments has been prepared.
In the part about Trade, my attention fell on the aspect, that Romney wants to create a so called „Reagan Economic Zone“, which dues to the economic policies accomplished by Ronald Reagan during the 1980s. The main aspects of Reagan’s economic policy were:
1. reducing the growth of government spending
2. reducing income tax and capital gains tax
3. reducing government regulation of economy
4. control money supply to reduce inflation.
Reagan presented his economic proposals as a return to the free enterprise principles. At the same time he represented the supply-side economics (in opposition to Keynesian demand-side economics). The proponents, that the tax rate cuts would more than pay for themselves, was influenced by a theoretical taxation model based on the elasticity of tax rates, known as the Laffer curve (more e.g. http://www.laffercenter.com/arthur-laffer/the-laffer-curve/). It predicts that excessive tax rates actually reduce potential tax revenues, by lowering the incentive to produce.
This zone would offer the principles of free trade at the international level. I think, this could be very attractive to a lot of developed – and also developing – nations. The dynamism of this economic zone would function like a magnet to countries, willing to have greater access to other markets. It would also serve as a mechanism for confronting nations (like China), that disregard trade rules while free-riding.
Romney bases his platform on the theory of supply-side economics as well. This indicates that tax cuts stimulate growth. (Supply-side economics seemed successful during the Reagan Administration, when tax cuts did boost the economy out of recession. However, the maximum income tax rate was 70%, and not about 30% the US have today, what makes it questionabel if the same effect is to be expected.)
In my opinion, in times of globalization it is very important to create kind of a free world market, which gives the possibility to everyone the have access to innovative goods. Transportation (also of knowledge) is easier and cultural barriers are reduced. The interdependence of the nation-states, the flexibility of corporations to operate across borders and the communication between the individuals and corporations increases. But there are also aspects against a complete „Free Zone“, because there could be a lack of regulation. It could cause people to lose their jobs as work is being outsourced to countries, where the cost of labor is lower. There is a risk that the corporates could rule the world, as there is a lot of money invested by them. Poor countries could be exploited by the richer ones. But not to end up in stagnation, it is always be important to innovate and develope, which is easier when having access to a width of markets, which provide the best prerequisites, while still being regulated by given rules/laws.
In his answer concerning innovation in Science Debate 2012, the Republican presidential candidate Mitt Romney stresses to start promoting innovation in the U.S. right after his election "on day one", including policy measures like simplifying "the corporate tax code", reforming "job retraining programs", reducing "regulatory burdens", and protecting "American intellectual property around the world". Furthermore he is planning to reform… Read more
In his answer concerning innovation in Science Debate 2012, the Republican presidential candidate Mitt Romney stresses to start promoting innovation in the U.S. right after his election “on day one”, including policy measures like simplifying “the corporate tax code”, reforming “job retraining programs”, reducing “regulatory burdens”, and protecting “American intellectual property around the world”. Furthermore he is planning to reform the immigration system to attract smart and skilled workers.
At first glance Romney seems to make use of a broad variety of policy measures to boost innovation, but in fact most of them don’t aim for innovation itself. The measures mentioned above certainly lead to benefits for science and technology industries, e.g. lower tax rates or less effort in fulfilling regulations due to a streamlining of them, which means saving time and money. On closer consideration these measures can rather be allocated to the fields taxation, immigration policy and so forth. Although Romney’s answer has at least three times the length of Obama’s, from my point of view it appears to be very vague and possible policy measures for long-term leadership in innovation are only mentioned at the end of his statement: besides reforming the educational system in order to enable higher education for a greater number of high school graduates, Romney states to “focus government resources on research programs that advance the development of knowledge”, without giving concrete figures. He also doesn’t refer to current innovation issues, which creates an impression of Romney lacking innovation knowledge. It is conspicuous that Romney tries to attack Obama’s innovation policy by mentioning the “misguided attempts to play the role of venture capitalist” instead of focusing on his own propositions. As a consequence I don’t consider his answer in this debate very convincing.
In my opinion it is important to strengthen basic research and therefore investing in public research facilities, such as universities, because basic research forms a basis for further research and development. Referring to the answer given by Romney, his focus is on the private sector. This tends to be unrewarding, because basic research is primary performed by the public sector. Basic research doesn’t generate specific commercial applications, so investments in basic research by private companies are rather low. To develop products and technologies providing significant purposes, the private sector relies on this basis. In combination with well-educated graduates, who can benefit from a reformed educational system, a broad funding of basic research should represent a promising approach of maintaining a world leader in innovation.
Obviously, I agree with you that investing in universities is very important 😉
Delphine Delaunoy
The policy measure I decided to give my opinion on is one of the thirty action points proposed by the European Commission in its Innovation Union initiative . Concretely, I selected the proposal called ‘Creating a single innovation market’ due to the fact that nowadays with the worldwide globalisation process and the integration process facing Europe, we cannot deny that… Read more
The policy measure I decided to give my opinion on is one of the thirty action points proposed by the European Commission in its Innovation Union initiative . Concretely, I selected the proposal called ‘Creating a single innovation market’ due to the fact that nowadays with the worldwide globalisation process and the integration process facing Europe, we cannot deny that this is a pertinent topic to be discussed about.
Since last year the EU and its Member States are looking forward to unify the regulatory framework in key areas . This could be seen as a step for further integration and solidification of the EU. The latter would thus become ‘a common heterogeneous market where standardisation favours innovation’ . If this unification is achieved, incentive could be given to firms in every Member State to either start or pursue their research as every Member States would be on the same ground.
It is irrefutable that access to knowledge could be boosted by this single market; this process would ease the exchange of knowledge among all the Member States.
Moreover, becoming a single innovation market, the EU could tend to be a more competitive market. More competition means more output on the market, and as Kenneth Arrow argued: “a firm in a competitive market would have high output levels, and so cost of an innovation could be spread thinly” .
This could help in the crisis recovery. Indeed, in its conference at TEDxULg, Florent Bernard who works as an Innovation Policy Officer at the European Commission depicted that “countries which invested the most in research and development were the one that are getting out of the crisis faster today” . Hence, by creating this single market, this would enhance innovation in countries and thus benefit the EU.
But aren’t there any shortcoming of this proposal? For example, some enterprises could take advantage of their good position regarding innovation, hence innovation sanity checks should be instituted to guarantee the long-term societal benefits of innovation .
Furthermore, clusters could be formed if, for instance, some countries are already more specialised in research and development than others. Therefore, firms in other states would probably want to locate in those countries in order to benefit from spillovers. In my opinion, small enterprises and universities should receive greater support in order not to lag behind big private firms.
To conclude, I can say that this proposal is a great issue, but actions should be taken forward to avoid potential drawbacks.
According to me, I think that the Information and Communication Technologies (ICTs) are a good tool to encourage the R&D and the innovation.
With the strategy of Europe 2020, the Commission wants to offer, among other things, a smart economy. A smart growth includes education, research and innovation, but also the ICTs. It’s true that one of the main… Read more
According to me, I think that the Information and Communication Technologies (ICTs) are a good tool to encourage the R&D and the innovation.
With the strategy of Europe 2020, the Commission wants to offer, among other things, a smart economy. A smart growth includes education, research and innovation, but also the ICTs. It’s true that one of the main initiative of this program is « the digital agenda for Europe ». It aims to create a single digital market by lowering barriers to fast Internet or by building trust in the online environment. It has already been shown that ICTs are a major growth driver because they explain half of the productivity growth of modern economies. So, there is a link between the ICTs and the R&D and Innovation. For example, a high-speed Internet has effects on the capacity of Europe to innovate, spread knowledge or distribute goods and services. But we know that Europe is lagging in this sector: low levels of investment in R&D and innovation, insufficient use of ICTs,…
To begin, the Commission wants on the one hand to promote the competitiveness of the ICTs industries and services and on the other hand to support the take-up of ICTs and e-business practices by enterprises. Then, the ICTs enable process and product innovation. And, the ICT policy takes into account the SME, too. Because, the entrepreneurship is also a driver of growth, the ICTs offers new opportunities to create networks etc,…
To conclude, because the intangibles assets (in particular human and technologic knowledge or ideas) are more and more important nowadays, I think that the ICTs are a great tool to control, improve and help the circulation of this kind of information. Investments in ICTs are a key factor for firm’s competitiveness but also the overall economic growth.
I'd like to share my point of view on another key initiative of the European Commission's Innovation Union: Delivering the European Research Area.
With this initiative the Commission aims to create“a European Research Area framework and supporting measures to remove obstacles to mobility and cross-border co-operation”.
One goal of this initiative is to improve the mobility of researchers across countries and… Read more
I’d like to share my point of view on another key initiative of the European Commission’s Innovation Union: Delivering the European Research Area.
With this initiative the Commission aims to create“a European Research Area framework and supporting measures to remove obstacles to mobility and cross-border co-operation”.
One goal of this initiative is to improve the mobility of researchers across countries and sectors. The benefits of this kind of policy (if it succeeds) is quite straightforward: making mobility of the researchers (and with them their knowledge) easier, facilitates the diffusion of knowledge among participating countries/sectors. Furthermore, the mobility benefits not only the visited institution (may it be an university, a public research institution or private industry) but also the researcher himself, who can acquire new knowledge by the interaction with the local researchers or by the use of the local research infrastructure.
But mobility, especially geographical and permanent mobility, also represents a risk. The researcher who leaves his country in order to continue his career and activity somewhere else, represents a loss for the ‘sending’ country. This may be even more problematic if there are many research-activities leaving the country. This issue is called the brain drain effect, which can in certain extent be detrimental for economic growth.
Another goal of this initiative is the European collaboration in research and development. Collaboration may bring several benefits to the participants: risk-sharing, more and easier access to financing, synergies… . Also, collaboration on an mutual research project can help to reduce duplication, and thus to gain some time by working together on the same project. As for the first goal mentioned above, there is also a risk: the concentration of research activity in the countries/regions that already are doing much research on a high quality level.
Thus, in my opinion, the Commission has to pay attention that the European Research Area will not only lead to a concentration of research activity and high quality researcher in certain region/countries/institutions, but that it will lead to a higher diffusion of knowledge and technology over all the participating regions and thus be profitable for the most national economies as possible.
In the recent studies carried out by European Commission in the annual research and innovation scoreboard (http://ec.europa.eu/enterprise/policies/innovation/files/ius-2011_en.pdf) European Union development in innovation is considerably lagging behind its competitors, international leaders in innovation – US, Japan and South Korea. Apart from that, emerging economies such as China, India, and Brazil have been diminishing the innovation gap over the past 5 years.
Therefore… Read more
In the recent studies carried out by European Commission in the annual research and innovation scoreboard (http://ec.europa.eu/enterprise/policies/innovation/files/ius-2011_en.pdf) European Union development in innovation is considerably lagging behind its competitors, international leaders in innovation – US, Japan and South Korea. Apart from that, emerging economies such as China, India, and Brazil have been diminishing the innovation gap over the past 5 years.
Therefore the proposed “Europe 2020 Strategy” (http://ec.europa.eu/europe2020/index_en.htm) has mainly been based on setting the innovation as the core element for Europe’s sustainable development. And one particular proposition by European Commission is to develop more complex and technically innovative products. However, to accomplish the stated objectives, and in particular – innovation in products, it is highly necessary to prioritize and improve many aspects in current EU legislation, development and investment strategies. And, as proposed by Marta Ripamonti earlier, is vital to improve the interaction between industries and research institutions, universities, so that scientific research and technological innovation goes “hand-in-hand”.
Proposed policy measures by European Commission should be defensible on both conceptual and practical grounds, so stimulating entrepreneurs to innovate and invest in R&D and encouraging entrepreneurial incentives should be set as priority Nr.1 and should be realistically achievable. However, the euro-zone crises have weakened the Europe’s economy – governments have significantly cut their spending (therefore also investing) and the tax burden has only increased, so how this can boost entrepreneur incentive to invest and innovate? As it is already known, higher taxes can discourage the investment rate and attenuate R&D funding, while alleviating the tax burden will have a modest positive effects on overall economic growth. It is undoubtedly true that high value-added industries, such as chemicals, “high-tech”, machinery manufacturing, etc drive growth, so wouldn’t it be reasonable to alleviate the taxes in such significantly important industries?
Another preposition that has a great importance on product innovation is to lower the costs of patent registration and their utilization. With realistic approach and possible positive outcome on such preposition you can familiarize yourself by following the link provided – http://ec.europa.eu/internal_market/indprop/docs/patent/patent_fees_report_en.pdf , but at this point seems that European Commission has its own views.
All in all there exists many ways how to help entrepreneurs to develop innovative products, but the real question is – what is the actual level of support and commitment from European Commission to reach the desired inclusive, smart and sustainable growth?!
When I read on the internet that the biggest part of the growth of the U.S. economy since the second world war was due to science and technology, I wondered what could be done by their government to stay one of the leaders in innovation for the next decades.
In a debate between Mitt Romney and Barack Obama in September, the… Read more
When I read on the internet that the biggest part of the growth of the U.S. economy since the second world war was due to science and technology, I wondered what could be done by their government to stay one of the leaders in innovation for the next decades.
In a debate between Mitt Romney and Barack Obama in September, the two U.S. presidential candidates give their opinions about innovation. I am especially interested in Barack Obama’s plan in education to develop innovation skills for American workers.
He says : “To prepare American children for a future in which they can be the highly skilled American workers and innovators of tomorrow, I have set the goal of preparing 100,000 science and math teachers over the next decade. These teachers will meet the urgent need to train one million additional science, technology, engineering and math (STEM) graduates over the next decade.” (Barack Obama in http://sciencedebate.org/debate12 )
With this development in the education, the future capacity of the U.S. to innovate would be higher than today in an economy which is nowadays focused on newness to drive economic growth. More graduates in science, technology, engineering and math should attract innovative ventures and help innovators to achieve their ideas. This should lead to growth in the U.S. economy and then they could keep their competitiveness in global economy.
I think Barack Obama’s interest for education is a good point because innovation is a long term process. Therefore the U.S. has to work now in order to stay competitive tomorrow. Education is a way to work for the future.
These are the reasons why I think that Barack Obama is working on the good points so as to develop economic growth by helping innovation in his country.
I would like to focus on the debate about Innovation carried out by the two US President candidates.
The first speech I read was Obama's. It reminded me of the period right after the Second World War - everything was about the USA, its superiority, its people. I understand his opinion has been taylored for the Presidential Campaing so as to… Read more
I would like to focus on the debate about Innovation carried out by the two US President candidates.
The first speech I read was Obama’s. It reminded me of the period right after the Second World War – everything was about the USA, its superiority, its people. I understand his opinion has been taylored for the Presidential Campaing so as to obtain consenses, especially in the current difficult climate of mistrust and crisis, but Americans are not the only ones that can innovate, that give birth to new and successful ideas. It looks like President obama is trying to follow President Reagan’s footsteps (“Let’s make America great again” and “Morning Again in America” were R. Reagan presidential campaign slogans in 1980 and 1984, respectively), but time has changed, and innovation cannot flourish in a closed environment.
On the other hand, candidate Romney leverages on US’ solid reputation of sustainer of new proposals and on America’s attractiveness for foreigner innovators and inventors. It’s a positive endless circle.
But I am not sure about how the tax reductions he proposes will work out – Romney needs to be trusted by stakeholders, and in order to do so he must ensure that his plans will last for a long time and that they are worth the investment. But it must be remembered that electors are not only entrepreneurs – rather than just offering lont-term perspectives, I believe he should also talk about how he plans to recover and fill the gap between today’s situation and the moment in which the economy will be ready to face his proposals.
Anyway, the US is still the country were R&D is a reality, where the exchange of knowledge takes place everywhere, where it is possible to develop an idea that has been rejected in other places. Americans created an atmosphere which is really hard to duplicate. Thus, I agree that, to foster innovation, it’s necessary to:
-reduce barriers that block the entrance of foreign people with good proposals
-apply new policies that allow to retain those minds and, of course,
-invest in education – the most powerful tool to grant progress
For this task, I will talk about the "plan Marshall 2.vert". The objectives of these actions are similarly the same of the two U.S. presidential candidates' objectives: to create activities and employment, to boost the education and to care about the environment. We see that the knowledge and the innovation have a place very important in this discussion.
It does seem… Read more
For this task, I will talk about the “plan Marshall 2.vert”. The objectives of these actions are similarly the same of the two U.S. presidential candidates’ objectives: to create activities and employment, to boost the education and to care about the environment. We see that the knowledge and the innovation have a place very important in this discussion.
It does seem not far of the Solow model. Of course the Solow model doesn’t integrate the environment; because in 50’s the environment wasn’t at the center of debates. But I won’t describe the entire “plan Marshall 2.vert”, I’m going to give my critical opinion about one axis of the plan.
“Axe II : Un succès à amplifier : les stratégies des pôles de compétitivité et des réseaux d’entreprises. Objectif : Poursuivre la mise en œuvre d’une nouvelle politique industrielle basée sur la mise en réseau des acteurs et, notamment, des pôles de compétitivité. Investissement total : 388 millions d’euros.” http://planmarshall2vert.wallonie.be/
This axis is which who corresponds the most with the chapter 2 (Innovation and economic growth) of the course Economics of innovation because we see that one solution to growth is: the importance of cross-border knowledge spillovers (course of Paul Belleflamme LLSMS2041).
In 2005, the government of Wallonie created some networks of actors and some clusters. It was a huge success. So in the new plan, they invest 388 million of euros to improve the clusters. And they have also created a new cluster: “Environmental Technology”.
For me, it’s a good initiative of the government. We have to assemble the firms of the same sector (Silicon Valley), and companies that need one others to prosper (like a sawmill and a carpentry). As we have seen in the course LLSMS 2041, the clusters have 3 characteristics essential that enable companies to develop and to innovate: “technological externalities, vertical relationships and labor pooling”. I think it’s a good idea, they found an excellent point to boost the growth. They also increase the expense en R&D, but it’s another axis so I won’t develop.
Now I will use the Solow model to explain the plan. Solow said that the output is a function of 3 elements: the knowledge, the capital and the Labor. With the plan, the government develop the labor (“ériger la formation et l’enseignement en fer de lance de l’accès à l’emploi” (plan Marshall 2.vert). The second element is the capital and the government invests 1 billion of euros. And third: the knowledge, I developed previously the axis 2 that permit an increase of the knowledge and the innovation. So, with the Solow model, the output will increase in the future.
To summarize they gave importance of the main point to increase the growth. We will see in a few years if their intentions will be a success.
As the perspective in the course so far is on the macroeconomic determinants of innovation, the discussion should not only focus on labeled “innovation policies” but also take into account more fundamental macroeconomic policies that affect innovation indirectly. “Innovation policy” cannot be separated from the macroeconomic environment it is embedded in as one can see when investigating the implications for… Read more
As the perspective in the course so far is on the macroeconomic determinants of innovation, the discussion should not only focus on labeled “innovation policies” but also take into account more fundamental macroeconomic policies that affect innovation indirectly. “Innovation policy” cannot be separated from the macroeconomic environment it is embedded in as one can see when investigating the implications for example of Mitt Romney’s “Plan For A Stronger Middle Class”.
The main goal of the plan is to ensure energy independence of the United States via 6 key measures, 5 of which promote American oil production, while the last one tries to “Facilitate private-sector-led development of new energy technologies”, later specified in the following way: “Instead of distorting the playing field, the government should be ensuring that it remainslevel. The same policies that will open access to land for oil, gas, and coal development can alsoopen access for the construction of wind, solar, and hydropower facilities.”
In summary, the plan increases subsidies on fossil energies while cutting back existing subsidies for renewable energies. What does that mean for innovation? Simplifying, we have two categories of energy that become substitutes to a more and more increasing extent. For what I know about the topic, it is reasonable to define renewables as the more category with more potential for innovation in the long-run, especially when thinking about a very long-run were fossil energies simply went extinct. Both in exogenous and endogenous growth models, Romney’s plan harms innovation as we will see.
Starting with exogenous growth models, even in a simple Solow model (which should work for the scope of this comment as we are dealing with the US) the negative impact of the plan becomes apparent. Knowledge enters the economy exogenously via A. A plan that actively redistributes government-subsidies (a factor externally affecting the knowledge stock) from a innovative technologies to technologies that will sooner or later be overcome simply by the fact of extinction would in terms of this model decrease the potential growth of A and by this of Y. The same result via different logic is reached in a Harrod-Domar setting where growth and innovation are driven by the savings rate: Cheap fossil energies could decrease the incentive to save in order to invest in renewable technologies as the pressure of a high oil price is lowered. (One could argue against that assuming that the cheap oil price leaves resources to be invested in research. But without short-term cost pressure it is unlikely these resources would go in renewable energy research).
But the Romney’s plan anyway sees innovation as endogenous to an economy, else the formulation of “private-sector-led development” doesn’t make much sense. Innovation is not only dependent on exogenous government spending, but also driven by incentives to invest in R&D of private companies. The problem with Romney’s plan can be analyzed for example by assuming a 2 sector endogenous growth model, where one sector produces human capital and thereby knowledge while the second sector produces “production goods”. In absence of an “Energy Indepence Plan” like Romney’s, any company would sooner or later face the problem of increasing costs due to scarcity of oil and increasing oil prices (actually they still do it with Romney’s brilliant plan, it just happens a bit later). This would work as an incentive to actively invest in the development of renewable technologies as they would become cheaper to deploy at some point. This investment would lead to a higher number of people working in the “human capital sector” and increase the stock of knowledge. Romney’s plan distorts this incentive. As fossil fuels receive government subsidies, they became cheaper thus reducing the cost pressure on firms. Without a massive cost pressure, the private sector (especially given the oftentimes short-term orientation of managements) loses incentive to be innovative in renewable energies. In a final point of time where fossil energies are extinct, the US economy could by this have a disadvantage compared to other countries which invested earlier in research in this field.
Summary: 1) innovation is affected by the macroeconomic environment and cannot be encouraged only via “innovation policies”. 2) Romney bases his plan on the assumption that innovation must occur endogenously (else his sixth key measure doesn’t make any sense) 3)Whatever macroeconomic growth model one uses, Romney’s plan always an obstacle for innovation and likely to decrease the growth of the knowledge stock in the economy. Even with Romney’s own assumptions, his plan hinders innovation. And the social (creating jobs in a sector that will stop existing within a couple of decades) and ecological implications of this plan haven’t even been discussed yet.
I would like to emphasize the importance of the Comission's initiative for "Enhancing access to finance for innovative companies", more specifically the commitment to establish a "Risk-Sharing Finance Facility". On the one hand, this aims at solving the liquidity problem, which oftentimes hampers innovation (many good ideas are not being developed due to lack of funds). At the same time,… Read more
I would like to emphasize the importance of the Comission’s initiative for “Enhancing access to finance for innovative companies”, more specifically the commitment to establish a “Risk-Sharing Finance Facility”. On the one hand, this aims at solving the liquidity problem, which oftentimes hampers innovation (many good ideas are not being developed due to lack of funds). At the same time, and perhaps even more importantly, the RSFF (Risk-Sharing Finance Facility) will ensure that the inherent risks of the research projects are pooled. In other words, research is never certain. One cannot know beforehand if the research will have any result and if yes, what will that be. As a consequence, there looms the risk of underinvestment, especially from the risk-averse players/investors.
However, if it will not be designed accordingly, this commitment may have drawbacks as well. For instance, if the risk and the financing are pooled and, say, there is a patent released for an innovation, the future users of that patent may be forced to pay fees to all participating parties, which will be cumbersome and very costly. In the end, this could lead to an underutilization of the respective innovation, contrary to the initial aim (in the words of Joseph Stiglitz, “raising the cost of knowledge”).
Additionally, I think that the initiative to pursue a review of the “State aid research and development and innovation framework” should improve the efficiency of the established innovation system. It is commonly known that sometimes, innovations arise in the areas for which there is already a market and an effective demand. For instance, not many companies would invest in health solutions for the poor countries, since they cannot afford these services, but will instead focus on delivering state-of-the-art solutions (to the extreme, somehow unnecessary) for the developed markets, where they will find buyers. From this point of view, it is very good for the Commission to balance somehow the “true” needs of the markets, since the less-developed countries can also contribute to the future growth of the EU, provided they are taken into consideration when allocating resources for innovation (as the description itself says: design an “effective and flexible instrument to allow for well-targeted public support for R&D&I”, for “innovations addressing major societal challenges, and their best use by Member States”).
Last but not least, one crucial initiative mentioned in the Commission’s Plan was that of “Promoting openness and capitalising on Europe’s creative potential”. In doing so, there will be more open access to the results of research and the knowledge transfer will be facilitated. This also adresses one of the first problems I raised in this comment, that of the cost of knowledge. It has been argued that knowledge is the most important input for more knowledge and that an efficient innovation system has to disseminate the information, not restrict it. Hence, enhancing the transparency and improving access to research should be a self-enforcing mechanism, leading to more innovation and growth in the future.
I would like to comment on the "Jumpstart Our Business Startups" (JOBS) Act originally introduced by the Obama administration on January 31, 2011 and passed by bipartisan support on March 8, 2012. The bill itself was signed into law by president Obama on April 5, 2012. I would especially like to comment on the possibility to use crowd-funding for companies… Read more
I would like to comment on the “Jumpstart Our Business Startups” (JOBS) Act originally introduced by the Obama administration on January 31, 2011 and passed by bipartisan support on March 8, 2012. The bill itself was signed into law by president Obama on April 5, 2012. I would especially like to comment on the possibility to use crowd-funding for companies financing their business.
The JOBS Act allows companies to use funding portals like Kickstarter for public offerings without the necessity to register these with the SEC under certain conditions. Without going into technical details, these conditions limit the amount a private investor can invest into projects based on his yearly salary. These restrictions are imposed to prevent professional investors from undermining SEC authority and instead aims at promoting small investments by multiple participants like private persons – this process has been coined by the term crowd-funding.
In my opinion, crowd-funding is an excellent concept for fostering innovation. Being allowed not to solely rely on professional investors like banks, hedge funds or huge private companies gives any startup more freedom and capabilities in developing its products. Professional investors are mostly interested in the money they can make by taking a stake in a project or company rather than fueling new ideas that could evolve into ground-breaking new products, technologies or services. Of course, successful products are often tied to innovation, however, the more innovative a product the riskier is the possibility of a failure. Opening investments to “the public” also allows the involvement of a total different type of investor. Private persons are in general more interested in the final product than making money. This gives small companies more creative freedom in development. Professional investments often consist of a few big players, who have a natural interest in influencing the project. I’ve been myself working in a small startup for nearly 2 years now and I’ve learned that nothing kills innovation better than making compromises with third parties or the necessity to concern yourself with tasks that don’t lie at the core of the project. Since the JOBS Act also relieves public offerings from SEC regulations, small startups will have to concern themselves with less bureaucracy.
On the other hand, crowd-funding also proposes certain risks. There is always the problem of free riders, who try to scam money from investors. This problem becomes even more prevalent, when private persons invest. They have naturally less knowledge about and less influence on their investment. Naturally, the success and perspective of small startups is ambiguous. This however, is an inherent aspect of economics of innovation. Funding portals should therefore be required to enforce a minimum standard for all business proposals.
In the end, I am convinced that the advantages outweigh the risks of this bill. Crowd-funding has already seen many success stories. Double Fine and inXile have both successfully financed upcoming video games that have been completely ignored by established publishers.
With reference to the Program proposed by the European Commission, called Communication on Innovation Union published on 6 October 2010, I wish to offer my point of view on one of the thirty action points, related to the issue linked to the growth of the Innovation Initiatives.
I think it could be quite interesting to focus the attention on the objective… Read more
With reference to the Program proposed by the European Commission, called Communication on Innovation Union published on 6 October 2010, I wish to offer my point of view on one of the thirty action points, related to the issue linked to the growth of the Innovation Initiatives.
I think it could be quite interesting to focus the attention on the objective called Promoting Excellence in Education and Skills Development (see: http://ec.europa.eu/research/innovation-union/index_en.cfm?pg=action-points ); my attention has been turned on it, because one of the most important international index, the HDI (Human Development Index – established by the United Nations in 1990, for ranking the level of development between nations) uses the level of education as one of its indicator; the level of education is taken in consideration because the single level of GDP is not enough for measuring the level of development: the GDP index takes into account just the sales and the purchases of a nation.
This addresses to reason on the fact that education is one of the powerful engine for the development of a nation and, as a consequence, the implementation of professional exchanges and the rising mobilization among the research units in Universities and Companies – that want to have access to this kind of knowledge – is an important area of investment for the European Union aimed at overcoming the economic and social crisis that is hitting the global economy.
It’s moreover attractive the idea, proposed by the European Commission, to make the collaborations between private firms and research workers – that comes from Academic world and that they want to interact with the companies for developing innovations – easier; this new channel of development, that would be opened by the European Union reforms, is pretty important in my opinion because a lot of times there is a lack between the demand and the supply of research.
For this reason, it could be relevant the creation of specific European funds, fit for implementing the collaborations between researchers and private companies that don’t belong to the same nation: this could be an incentive for moving knowledge from one nation to the other and it could even increase the circulation of information – that is a factor often taken in consideration in nowadays speeches about information and development – .
At the same time the cooperation between two different types of sector – private and public one – could lead to some problems, as: the protection of IPRs (Intellectual Property Rights) and confusion/misunderstanding on the distinction between Technologic or Scientific Innovation. This should address the European Commission to create a set of rules/regulations that regulates in this specific field.
Just for summing up my opinion, I think that the decision taken by the European Commission – implementation of knowledge exchanges – is a step forward the awareness that education is the foundation of development.
Comments for How to make innovation drive economic growth?
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We are more and more living in a world where evolution and changes become essentials to the growth of our economy. People make researches, create, develop, update, innovate and try to make more and more invention. But, unfortunately, inventions are not powerful enough to struggle strong competitive pressures from the globalisation. As the European Commission declares in its Innovation Union initiative, what Europe needs to ensure its economic growth is innovations in products, services and business models.
However, some people don’t really know what’s exactly an innovation. They are confused between invention, progress, innovation, updates… so it’s relevant to point out wrong ideas that peoples usually have over it and its creation to be able to erase it.
Indeed, Innovation is not something coming from nowhere that happen by chance but it’s the fruit of a lot of work, along with a favorable context and based on different people’s work. That’s why create an invention doesn’t mean it will turn into innovation, while an innovation is a successful invention. Hence, a study and creation of a appropriate context is critical; not only technical and organizational but also institutional and cultural.
Now it’s clarified, we can easily understand the weight the context can weigh in the success of an invention. As a project manager, you also have to realize the work process to create an innovation is long, so it’s primordial to pay attention on the environment of your company, keep your workers comfortable in a pleasant sphere, well analyse the market’s needs and keep a favorable political aspect; to ensure that your release on the market will flourish.
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I fully agree with the idea of the intertwining of innovation with technological development, as is the proposition of the case presented. Nevertheless, and especially when it comes to what innovation can do to foster economic growth, I tend to assign it a broader role: effective generation of value-added through the creation of new products, processes, organization models, or means of approaching the market (marketing).
The innovation is about making something different and out of the box in a much developed way and then produce and create value. Innovation allows us to live in a better way, more sustainable, healthier, enjoying the time available in a convenient and comfortable way… taking advantage of a more efficient use of resources. And that’s the essence of economic development, as the “science of economics” is about dealing with “scarcity”: providing ways for the humanity to generate and create more value with less resources.
To briefly illustrate with simple examples what, in my opinion, innovation can do, take McDonalds: through a brilliant and standardized process, they are able to provide and sell several meals per hour making those hours more profitable such as the work of the employees. Innovate in the organization; example: in older times, in a car plant there was a specialization of the work of the employees which was obviously not as effective as organizing the work per cells with employees of the company working together with external providers: more capacity with lower defects, ie. More quality and efficiency.
Another example on innovation through better organization models: the use of the internet allows us to communicate and work in a long distance which makes the work more profitable: more work, with more cooperation, and lower costs.
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Of course innovation is an important and crucial factor to improve the economy of all over the world, but the question is: How to do it? How can we implement innovation in the economy field?
The European Union has created an asosiation named ” Innovation Union ” which purpose is to implement newer and grenner technology for create more jobs and give to their citizens a better state of life. And how they’ll do it ? They are implementing new carreers in the best universities of Europe, they are introducing new topics in all the careers since the economy and market fields to the scientific and engineering ones. Also they create a program for exchange students for get more people from all over the world and they have new ideas of market wich is available in their page(1) and it has information of patents, of banks, of the alliances of the industry, etc.
This is one way to make a change in the European economy and that has make a difference now and will keep doing it as in the page says ” The Innovation Union is one of the seven flagship initiatives of the Europe 2020 strategy for smart, sustainable and inclusive growth”.
I also would like to share this news that I found in the page:
Wednesday, 01 October 2014
New pan-European pension fund to boost researcher mobility (via RAPID)
European Commission Press release Brussels, 1 October 2014 Mobility of researchers in Europe received a boost today with the launch of a consortium that aims to establish a new pan-European pension arrangement. Once put in place, the RESAVER initiative would mean that researchers could move freely without having to worry…
Source.
Show less(1) http://ec.europa.eu/research/innovation-union/index_en.cfm?pg=home
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In 2008, Barak Obama and Joe Biden proposed a plan for science and innovation. The main features of this plan were: restoring integrity to US science policy, doubling over a 10 year period the federal investment in basic research, making a national commitment to science education and training, encouraging American innovation to flourish and addressing the big challenge of the 21st century.
I would like to focus on the second point: « the investment expansion in research and development ».
The plan on this investment engagement was to focus on two main actions:
a) Double the research budgets of the main science agencies over a decade (as the National Institutes of Health, the National Science Foundation, the Department of Energy’s Office of Science, and the National Institute of Standards and Technology).
b) Actively encourage multidisciplinary research and education.
Without considering the outcomes of this innovation plan, I think that these two key points are promising. It seems the US was under-investing in research although it’s an area which provides positive input to the economic growth as mention in the article.
Obama and Biden understood that this under-investing was unacceptable and aimed on the innovation and science aspect will drastically help to re build the economy.
First the first action: doubling the research budget will increase the human knowledge, offering better support for ‘high-risk, high-return’ research and will allow the next generation of scientists to focus their research on the “grand challenges” of the 21st century (energy, climate change, information technology, …). Unfortunately, most of the problems would be erased with financial solution, and regrettably, research and development is a horribly expensive field. If the support is bigger, fundraising wouldn’t block or delay innovations and wouldn’t discourage the scientist working on them (as it often happened in the past).
For the second action concerning the multidisciplinary research and education, it is again related to this 21st challenge.
We hear frequently that, innovation often arises from combining the point of views, data, techniques, and results from different fields. With all these new technologies and the new problems we are facing, on disciplinary cannot solve issues alone.
I believe that educating people and convincing them is one of the most important key point to focus on. As mention in different innovation management lectures (LLSMS20402042 – B.Gailly) concerning innovation, half of it is convincing people.
Therefore, educating people to mix disciplinary will allow a better understanding thus a better individual output, to eventually get a better help, support and approval for, as mention, the big challenge of 21st, the economic growth and futur issues which would be dealt with a great research, innovation and science background.
As mention again, my opinion doesn’t involve the outcomes of this plan but comment, as it would have been at the time. The key points sounds promising and the thinking put into it seems coherent.
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This is well-known that innovation is the a key for the economic growth. Let analyze the last 10 years for a second, smartphones, internet (the cloud, social medias, download plateforms), advanced technologies in cars, house… All of this innovations have made our lifes easier, and lead us to the economic growth. Investing in R&D is essential to the survey of each technological firms in the world if they want to resist the constant evolution and stay at the top.
European leaders are correct when they say that Europe has to place innovation at the top of the agenda. In fact, globalization and stronger competition around the world must not weaken Europe. In other words, if European companies don’t take the lead of new innovative products, they will struggle to remain competitive.
But my point is that innovation is maybe important in an ageing population. But it will not resolve the unemployements problem. More than that, my point is that innovation is badly used. Indeed, most of the new technologies came out big firms labs and the profits of these techonologies are unequaly distributed. This lead to a gap between leaders of the firms and the population wasting its money to enjoy the revolutionary products.
Show lessAs I said above, innovation in Europe is not a solution to the unemployments problems. As every body knows, the workforce in Europe is to expensive for the firms looking to produce their new technologies, so they are looking for other region of the globe where they can produce it at large scales and lower costs. In fact, the engineer and developers come from Europe but it is quite a small group.
As a conclusion I would say that Europe has to focus on Innovation but has to control it as well. If there is no control from them, European citizens are going to be more poor than ever.
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I won’t discuss the connection between innovation and growth but a particular policy that is threatening innovation incentives and competition in the Internet setting. Throughout the last years, Net Neutrality (NN) has become a hot issue in American politics. Recently, the Federal Communications Commission has expressed its intentions to establish a two-speed network. Despite Barack Obama has vaguely supported the NN concept, he has not effectively provided a clear-cut definition of what NN means to him, and so I will defend that a “genuine” (e.g, non-Barack Obama) NN setting provides incentives for innovation and entrepreneurship.
Net Neutrality requires Internet Providers (IP) to offer identical quality of service to Content Producers (CP). Contrarily to this principle, both the US and UE are currently having debates on whether regulation should enable IPs to diversify their internet services -for instance, allowing IPs to create a premium service that provides a speed advantage over competitors. It is often argued that such a setting would incentive IPs to invest in new infrastructures. However, this system would undermine innovation and competition among CPs.
First, crucially, the end of Net Neutrality would lock small companies and start-ups out of the Internet provided these can’t afford extra fees for fast lanes. Therefore, creators in need of high bandwidth would never be able to compete with major, established companies in terms of service delivering. Secondly, IPs usually provide cable services, therefore, the latter would give an unfair competitive advantage over other content providers that don’t have their own infrastructure –for instance, think of Comcast versus Netflix or a new on-demand streaming service. Moreover, IPs would even have incentives to make the regular, no-premium lane even slower. Altogether, innovation in web-based companies would be harmed.
Finally, the potential incentive for IPs to create more efficient infrastructures is not that clear-cut. As said before, IPs may eventually create a slower lane as opposed to a fast lane –this is, IPs may just keep the current speed for premium companies. Having said that, the underlying need for a new setting that fosters further network development incentives is a rather strong assumption. On the one hand, US speeds are already growing at rates that would allow them to double every three years. On the other hand, current developments in IT let us think that web content is evolving towards a more efficient use of bandwidth –for instance, HTML5 or the creation of new video formatting.
All in all, I believe that Net Neutrality as defined above is a necessary condition for free competition and innovation incentives in the Internet. From my point of view, a two-tracked setting would strongly change the dynamism and struggle among web-based companies. Both US Government and the European Commission should have a more clear stand towards Net Neutrality.
Resources used:
Show lesshttp://republic3-0.com/are-we-winning-or-losing-the-broadband-race/
https://www.law.northwestern.edu/research-faculty/searlecenter/workingpapers/documents/Reggiani_net_neutrality.pdf
http://www.forbes.com/sites/toddhixon/2014/05/20/heres-what-the-end-of-net-neutrality-could-cost-you/
http://heartland.org/policy-documents/real-cost-network-neutrality
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In order to have a « clever growth », Europe has to be more effective in three areas : Education, Innovation and Numerical Society.
First of all Europe plans to create a digital strategy based on « high-speed » Internet (Numerical Society). I think it’s a good solution because Internet is a tool which could be a big source of education. But be careful because it also can be a source of bad information and we have to teach people to well use it.
Secondly Europe has to invest in R&D and innovation. We demonstrated in our lessons the existence of a link between R&D and economic growth. We also know boosting economic growth is necessary to meet challenges of the financial crisis (higher unemployment, larger fiscal deficits,…) and the standing challenges (population ageing, climate change,…). However, we have to be careful because an increase of investment in R&D is not always synonymous of growth.
Finally, Europe has to help students to be more trained and equipping for the job market. For instance, to send students abroad is a great solution to adopt knowledge generated from other countries, culture and education. The best way to grow up is to open ourself to the world.
To conclude, I think innovation is one of the best growth strategy in a changing world in order to have a sustainable economy and I’m convinced Europe will meet most of its commitments for 2020
Sources :
Show less– http://ec.europa.eu/europe2020/europe-2020-in-a-nutshell/priorities/smart-growth/index_fr.htm
– Lecture 3 : Innovation and economic growth
– http://www.oecd.org/science/inno/39374789.pdf
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I think the link between Innovation and economic growth is clear for everyone. Therefore, I fully understand innovation as key focus topic for Europe 2020 strategy for growth and jobs. Nevertheless innovations need to be framed depending on the current global concerns they attempt to tackle to. Innovate with the only purpose of innovate, makes non-sense. It must address current challenges such as environmental concerns, providing employments, and economic recovery.
When we ask people what do they think about “innovation”, they have Samsung, Tesla, and other huge companies that come in their mind. However, those companies are usually not innovative. But they do enjoy from significant leveraging means and resources. For instance, the first “Ipod” has been invented few years ago from the French company Archos. They are the one who brought innovation in the music industry and offered a substitute to the Walkman and other portable music player devices. For many people, the “Ipod concept” comes from Apple, which is seen as a highly innovative company whereas they just took the innovative idea from someone else, designed their own device, and brought it into the market with a heavy marketing campaign under the lead of the charismatic Steve Job. And they did the same with the smartphone who existed a long time before the IPhones. There are plenty of such examples showing how huge firms, known as innovative, just picked existing inventions and after few modifications made a huge success out of it.
My point is: shall we give incentives to companies to innovate more and bear the risk that because a lack of resources the innovation may be stolen by a technological giant? Or shall we instead help smaller companies that do really innovate to implement and monitor their innovative idea till the end by providing them some support to launch the production and bring it on the market? I personally would opt for the second alternative.
According to me, innovate isn’t only a matter of idea. A successful innovation is a good idea combined with a capabilities and capacities. The trend is companies with capabilities and capacities acquiring ideas from smaller organizations not financially strong enough to lead the idea to implementation. Then innovation comes from giant such as Samsung, Apple, Google, … but those companies will not make things improve from an economical perspective. They are already so big that they do not hire anymore, they find all the subterfuges to pay less taxes as possible and finally participate less and less to the economy and to the society.
Therefore, I do believe that Europe 2020 strategy for growth and job should strongly focus on providing support to smaller entrepreneurs that come up with innovative and useful ideas, in order to help them to bring their own invention on the market under their names. Those smaller companies are the ones with the most promising growths; they are the best positioned to spot solutions to global concerns, they will participate to the economy and hire more people.
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I focus on how the innovation impacts American economy.There has a long history of using the innovation to stimulate the development of economic in America.In 2009 ,Barack Obama refered the importance of innovation in his inaugural address.
For everywhere we look, there is work to be done. The state of the economy calls for action, bold and swift, and we will act — not only to create new jobs, but to lay a new foundation for growth. We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together. We will restore science to its rightful place, and wield technology’s wonders to raise health care’s quality and lower its cost. We will harness the sun and the winds and the soil to fuel our cars and run our factories. And we will transform our schools and colleges and universities to meet the demands of a new age. All this we can do. All this we will do.
——President Barack Obama,January,20,2009
America’s development is inseparable from innovation.Before first industrial revolution,American real per capita income is only four percent of today,poor infrastructure,planes and computers are impossible things in that time.But the industrial revolution changed everything.American industry exponentially grew after industrial revolution.
It can be seen from the example of American modern industry,making advanced become possible,the state should rely on innovation and industrialization. Innovation of industry can enhance the output value of labor,create jobs,improve living standards,enhance the country”s international competitiveness.In a word, innovation can provide huge benefits to the country.But how it does works?
“Competition[in the global economy] is going to be much more fierce and the winners of this competition will be the countries that have the most educated workers,a serious commitment to research and technology,and access to quality infrastructure like roads and airports and high-speed rail and high-speed Internet.Those are the seeds of economic growth in the 21st century.Where they are planted, the most jobs and business will take root.”
——President Barack Obama,December 6,2010
President Barack Obama mentioned the importance of innovation in his twice inaugural address,and gave some strategies to stimulate the development of innovation. We can see the detail of these strategies from .I want to talk about the investment in R&D.American government promised investing more than three percent of its GDP in public and private research and development.In my opinion,it is a very useful strategy to support the private research and innovation.Because the business innovation which can promote economic development often depends on the breakthough of basic science.President Obama gave huge investment to three key research agencies–the National Science Foundation,the Department of Energy”s Office of Science and the National institute of Standards and Technology.These substantial investment will lay the foundation of the emergence of new inventions and technologies in America.And these new things can improve the life quality of Americans,create jobs and develop new industries.These investments can assist the development of U.S. in some areas such as robotics,data-intensive scientific and engineering.
A strategy for American innovation–secuing our economic growth and prosperity http://www.doc88.com/p-214656667015.html
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Under the several assumptions behind the Solow model approach ( perfect competition, CRS, diminishing marginal returns, constant population growth rate, constant and exogenous technological progress, constant savings rate), one interesting outcome is that given an exogenous source of change (shock) – such as a new available technology due to innovation and knowledge will lead in the long – term ( steady state) to economic growth. It happens because, under a constant population growth the accumulation of capital is higher, therefore the capital per capita (per person) is also higher. A concept that is implicitly derived from this model is poverty trap – that is the low income countries will remain poor because they are not able to escape from that trap, not only due to large population growth (not assumed in the model) but also to the fact that they do not have access to technology and innovation which, as already discussed, seems to be fundamental to development and growth processes.
Recognizing the importance of innovation to economic growth well illustrated in the Solow Model (at macroeconomic level), the next desirable step would be defining policies that aim to improve innovation systems. Policy – making and decision is important for impact evaluation purposes, I mean one should evaluate the consequences – either positive or negative of an implementation of a given policy, in order to define causality(ies) – the main concern of the economists.
In the following lines, I express my view about one of the policies aimed to be implemented at European Union level in what respects Innovation. As one knows , innovation issues are entailed in the strategy of Europe until 2020 – R&D should achieve the threshold of 3% of GDP of the Member States. And the reason behind this fact is that Europe faces, at the moment many challenges that can be fulfilled through innovation, such as competitiveness of companies in global market, get rid of the crisis, secure resources like fuel and food, global warming, improvement of smart and ecological means of transportation, among others; but also some constraints: lack of financial resources, costly patenting, fragmented efforts among members and regions.
According to the actual president of European Commission, Jean Claude Juncker, Europe needs a “reindustrialization”, where innovation necessarily takes a position. Europe had already defined several commitments concerning Innovation Union, which the more expressive ones are: “put in place national strategies to train enough researchers”, “ test feasibility of independent university ranking”, “ create business – academia Knowledge Alliances”, “Propose an integrated framework for e-skills”, “Propose an ERA framework and supporting measures”, “ Creation of Pan- European Pension Fund for Researchers”, “ Construct the priority European research infrastructures”, “ Put in place EU level financial instruments to attract private finance”, “Ensure cross-border operation of venture capital funds”, “Strengthen cross-border matching of innovative firms with investors”, “ Deliver the EU patent”, “ Present an eco- innovation action plan”, “ Establish a European Creative Industries Alliance”, “ Develop a European Knowledge market for patents and licensing”, Safeguard against the use of IPRs for anti-competitive purposes”, “ Improve the use of structural funds for research and innovation”, “Put in place integrated policies to attract global talent”( see more at “State of Innovation Union, Taking Stock 2010-2014”).
Among the exhaustive list of the commitments that Europe seeks to ensure, I would like to focus on the first one –“ Put in place national strategies to train enough researchers”. One have been referring to innovation as the main input and output for knowledge production, nonetheless without previous human capital investment ( and even a step back- childbearing in an ageing Europe!!) – that is – education, formation and training, the desirable return – innovation is impossible. Moreover, this investment should be complemented with engagement of people to keep studying and to be a researcher, besides their intrinsic motivation and abilities to do so. One important non-financial incentive that can be given to a researcher is to connect his/her work to business or services, it is a manner of recognition of talent and a spread of innovation and Knowledge (“ Europe has relatively few researchers employed in industry, making up only 45 % of total researchers compared with 78 % in the US, 74 % in Japan and 62 % in China.”). Actively integrate researchers in labour market seems to be an important response to improve synergies between different interests and responsibilities in a corporate environment and boost global competitiveness. Researchers are indeed the most essential input, but also the hardest to perfectly accomplish.
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Instead of identifying a particular policy measure set up by the European Commission, I think it is much more interesting to focus on what goes on even deeper behind the scenes and the decisions that the EC will be taking over the last years of this decade.
In order to help fight the ever growing markets that BRICS are, the European Commission has decided to set its focus on what Europe does best and that is to innovate. BRICS are playing the catch-up game and create value that is mostly coming from common goods that European countries aren’t willing to produce on their own soil because of costs. The EU on the other hand has the clear advantage when it comes to research and development as well as innovation.
The European leaders have therefore decided to create think-tanks amongst which the “Research, Innovation, and Science Policy Experts” also known as RISE that is set in the line of Europe’s 2020 strategy focused on growth driven by innovation and research.
RISE is composed of 38 members coming from very different backgrounds sharing one common goal; help Europe sustain a stable growth driven by innovation.
I do believe that delegating tasks as important as finding ways and overall strategies to help Europe find its way for the rest of the decade but also for the decades to come is of the utmost importance. For the last 10 years, Europe as well as the US have been losing the economic battle against emerging countries who can produce at a much lower cost, with almost the same quality and just as efficiently. Big industries have been relocating left, right and center to greener grass in Bangladesh, China or Taiwan which has led to higher rates of unemployment and in terms strikes.
The European Commission knows that now is the perfect time to act as Europe’s biggest strength is not its industries anymore but its intellectual manpower. The power to innovate and to create is still Europe’s best weapon to fight off possible newcomers and competition coming from emerging countries.
While I deeply believe that everyone should have its share of the pie, I also believe that each country or group of country should be focusing on what it does best, what it can offer that no one else can or that no one else can produce for as cheap. If that is not the case, countries able to provide cheaper labour whether it be intellectual man power through innovation or manpower creating tangible assets, I expect economic cannibalism to happen. Smaller and poorer countries that cannot keep up will suffocate and be eaten by the major players in a more globalised economy than ever.
Sources:
Show lesshttp://ec.europa.eu/research/innovation-union/index_en.cfm?pg=expert-groups
http://ec.europa.eu/research/innovation-union/pdf/expert-groups/terms_of_reference_rise.pdf#view=fit&pagemode=none
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In his 2014’s State of the Union speech, Barack Obama said : « We know that the nation that goes all-‐in on innovation today will own the global economy tomorrow. This is an edge America cannot surrender » (see all his address at the following link http://www.whitehouse.gov/the-press-office/2014/01/28/president-barack-obamas-state-union-address).
I think that is a very ambitious though and in order to enforce innovation and economic growth President Obama established some policies. I’ll point out one in particular : education.
Indeed, I believe that education is the main key of innovation and economic growth as a lot of scientists have already argued in many papers.
Education starts at the very first years of school and particularly during the primary school. All children should access to a good education in order to be well-‐educated, have an open mind and an entrepreneurial spirit.
Show lessBarack Obama is well aware that education is the key and mentioned some facts in his speech : « … the White House just organized a College Opportunity Summit where already, 150 universities, businesses, and nonprofits have made concrete commitments to reduce inequality in access to higher education – and help every hardworking kid go to college and succeed when they get to campus ».
« We also have to prepare tomorrow’s workforce, by guaranteeing every child access to a world-‐class education ».
I totally agree with him but what about teachers, educators, instructors and so on ? In my opinion I believe that it is important that government invests in teachers’ training by doing regularly some traineeship in order to keep teachers aware of our very quickly changing world and to lead them at the forefront of teaching.
By doing so, not only every child would access to education but also benefit from best education and are well prepared to innovate in future years.
There are obviously many other factors that lead to economic growth such as absence of inequalities, gender equalities, low unemployment rate, health insurance, etc. but I think that education is the fundamental one.
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I would like to comment Barack Obama’s quote. In a general point of view, innovation seems to be a source of economic growth, there’s no doubt but the context is key.
A first point explain why context change the way that innovation impacts an economy. As Krista Donaldson explained during a TEDx conference (https://www.youtube.com/watch?v=zPUsaFDF9r0), we see that innovation won’t bring well-being just because it is innovation. There is a need to think about the after-launch, to think about how to use it and in what extend is it good.
I don’t think we can ignore the responsibility we gain from innovating. Indeed, Leò Szilárd had patented the nuclear chain reaction in 1934. That was pretty innovative. But from today’s perspective, his research brought to nuclear bomb. Wikipedia (don’t consider it as a source but well as an illustration) says “In a very real sense, Szilárd was the father of the atomic bomb academically” (http://en.wikipedia.org/wiki/History_of_nuclear_weapons).Ethics should be involved in the innovation quest.
My second point is about the “America” focusing. Since the context is so important, how is it possible to build an economy withdrawn into itself? We’re living in a global world. Marshall Mc Luhan talked about a “Global Village” where “everywhere is now our own neighborhood”. So I am not sure that focusing an economy on his own country is a good solution for sustainability. Of course it is important to stop employing low paid workforce to increase profit, but I’m not sure that a country can use its own “energy” even the USA.
Finally, there are still some key words that are important; together, build an environment, skills. These are challenging theme. Working together is not obvious when it comes to reality and it is still a way to go further. As I said, the environment, the context will define the evolution. And skills, with all the aspects it means but it’s not the place to detail it, is a source of future growth for economy, well-being, equality… and, needless to say, not only for the USA.
To conclude, I feel like Obama has good considerations for his country and I like his concern for the people. But the solutions are not easy to find and there’s still a long way to go I guess.
Show lessThanks for your comment. Do you have a specific policy in mind (proposed or implemented by Barack Obama)?
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Those who need innovation can’t afford it.
On a global scale I find it alarming, yet not surprising, that both candidates running for president last American election focused on innovation in America. To earn votes it makes perfectly sense, but at the same time it highlights the problem of what we value in innovation.
Most innovations are valued based on their potential return. A good invention isn’t an invention that saves lives, creates peace or solves global warming. A good invention makes money. Of course, if you can cure deceases or avoid a war the public will also consider it at “good” invention.
Why is this true? Because of all the inventions we came up with the last decade, and the once we will come up with this year or in a few years are in majority trying to solve first world problems. I’m not saying this is a bad thing. It’s amazing how we are able to do all sorts of things in a better way. But we neglect a huge part of our fellow brothers and sisters walking around on this planet.
The problem I want to highlight, is for example that millions are spend on making people in the west able to live a year or two longer, while at the same time people die from the lack of good medications around the world. Why is this? Because its not profitable to target this groups of people.
You might ask how this can change, and I don’t have a good answer to that (I guess if anyone had, they would already be in possession of a few Nobel prizes).
You might say I’m a dreamer, as John Lennon sings. But what I’m hoping for is a way of valuing innovations that could change our course, and that the next candidates running for president in any country will say:
“We can work together to create an economy build on global manufacturing, global energy, and skills of all the workers around the world.”
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For my part, economy is driven by many things and innovation it one of them. For decades, even centuries, innovation has created jobs and wealth but also raised well-being in homes and at work. Innovation is everywhere around us and change everyday our way to live.
Show lessIn my opinion, an important aspect of innovation is education. I think that Barack Obama knows the importance of a better educational system and will succeed to create innovation on a long term point of view.
“If we want America to lead in the 21st century, nothing is more important than giving everyone the best education possible — from the day they start preschool to the day they start their career.”
—President Barack Obama
By making college more affordable, giving higher education and supporting the teachers he gives himself the chance to be competitive in the future.
In addtion to that nowadays to have a post-secondary degree is no longer just a pathway to opportunity for some talented people but it is a prerequisite for the jobs of our new economy. This is the reason investing in education and university is a necessity.
In an article about a report of The Bureau of Labor Statistics in the united states I could observe the comparison between the level of education and the unemployment rate. The figures are really interresting as it exists a direct correlation. For exemple; “in 2007 among the adult population without a high school diploma, the unemployment rate was 7.1%. For American who graduated from high school, that number dropped to 4.4%. If you went on to earn an associates degree, your odds of finding a job continued to improve, with unemployment at 3%. And if you earned a 4-year college diploma, unemployment was just 2.2%”http://www.insideindianabusiness.com/contributors.asp?id=1277#middle.
Those figures show directly the impact of the low level of education on unemployment. I’m convince that in order to innovate we need to have skilled people among our country that have the tools to make innovations and then the growth will follow.
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As we can see from this article, innovation is very important for economic growth. Neither Barack Obama nor Mitt Romney and neither the European Commission don’t contradict this. On the contrary, each has his way to support it.
As stated in the website http://www.sciencedebat.org, innovation is related to the science that ensures continued economic growth. Indeed, since the Second World War, the U.S. economy has seen its economic growth to rise by nearly half thanks to science and technology.
As we all know, the United States have two candidates for the presidential elections: Barack Obama and Mitt Romney. Each one has his opinion on the subject of innovation, although some points have sometimes the same goal.
On one side we have the former president, Barack Obama, attaching great importance to innovation, industry and invention. That would allow America to achieve economy based primarily on manufacturing, energy as well as workers.
Hence his desire to double the funding for science centers.
On the other hand, Mitt Romney supports rather than innovation is the foundation of economic growth and job creation.
He also wants the American economy to be rebuilt on the basis of free enterprise, hard work and innovation. During his campaign, he even tries to convince other countries such as offering permanent residency to foreign students.
Reading the article, I decided to focus on the speech of Barack Obama. Indeed, these goals are long term than those of Mitt Romney. We can show it when he proposes to train teachers in science and mathematics, which will be useful for future generations, ensuring a good science education for future graduates.
In addition, the outgoing president promises to increase funding for innovation: “I am committed to doubling Funding for key agencies to supporting research scientists and entrepreneurs.”
Show lessMoreover, it would increase jobs created by investing in the creativity and imagination of people. Economic growth would be enhanced through investment given to innovation. Barack Obama said about it: “This economic growth will bring Greater income, higher quality jobs, quality of life and Improved to all Americans.” In this regard, he added: “The first step in winning the future is encouraging American innovation. None of us can predict with certainty what the next big industry will be or where the new jobs will come from. Thirty years ago, we couldn’t know that something called the Internet would lead to an economic revolution. What we can do — what America does better than anyone else — is spark the creativity and imagination of our people. ”
(sources: http://www.whitehouse.gov/issues/economy/innovation)
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Under innovation and growth, one of the strategies proposed by presidential candidate Mitt Romney is focus on the human capital aspect. Here, he proposes to make immigration laws more flexible for highly skilled foreign students with an aim to attract as well as retain top talent within the country. He also proposes to implement retraining programs so as to empower individual workers.
This policy seems to be in line with the strategy of the country to maintain its global comparative advantage in science, innovation and creation of new products that are technology based or driven.
From an immigration perspective, studies have shown that the contribution by foreigners to science and innovation has grown over the years in terms of patent applications and published research papers or articles. These studies have shown that there is a positive correlation between enrolment by foreign students to US academic institutions and the developments the country is making in innovation. For instance, a study by the US Census Bureau in 2009, showed that 47% of doctorate holders at the national level are foreign students. Therefore, given the continued growth in contributions by foreign scholars to the US economy, making immigration rules more flexible would cork to the country’s advantage.
In addition, investment in human capital especially for research and development purposes cannot be easily refuted since the country’s export in advanced technology products dropped at a lower level (9% less) than the decline in non-technology driven products during the financial crisis as evidenced by a study by the National Science Foundation in 2011. Investing in human capital that will boost the creation of new technology driven products will therefore help the country in reducing trade deficit gaps.
For these reasons, I am in agreement with his proposals on human capital.
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In the Science Debate 2012, the two major candidates for the U.S. Presidential election in November were questionned on their plan and ideas regarding several issues such as innovation and education. Furthermore, both of them emphasis the need to stimulate research and innovation in order to be able to address the current economic issues.
Barack Obama made the commitment of doubling the government expenditures for research agencies so that scientists and entrepreneurs maintain their efforts in terms of new technologies. As far as I am concerned, I tend to believe that such commitment is a great step that will acknowledge the science area how their government seems to be implicated in their field. However, as in every candidates’ speech, the figures of that kind of measure is often not mentionned or either exagerated. That’s why, I think we should be carefull with declaration of candidates and identify if it is a workable measure that could indeed enhance the sector of innovation.
Moreover, Barack Obama announced that he would meet the challenge of preparing 100,000 science and math teachers over the next decade with the expectation that it will lead to a larger well-trained population. Here, the education is pointed out as a concrete alternative to tackle their loss of leadership in innovation. For my part, I am convinced that this measure is remarkable and will yield great results but I am favour of the people who believe that the quality always prevails over quantity. In other words, I have the fear that there will be many graduated scientists but can we really offer the same level of training to every one..
To cut a long story short, I observe that the link between economic growth and innovation is globally taken into account in a manner that the autorities all around the world are implementing measures that will help to thrive the economic growth. In this way, the proposed policies by Barack Obama are noble and need to be taken into consideration precisely, i.e. identify which are workable and efficient.
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Innovation is for the European Commission the main factor of productivity growth in many sectors and companies. This institution also considers that innovation is an important tool for the creation of new jobs.
It refers to both technological innovation and the more efficient use of existing resources and technology, as well as new techniques of management and organization. Innovation has the potential to generate, absorb and disseminate knowledge, therefore, it is necessary to have people with the appropriate training and skills to develop.
But accepting the previous premise as true, whereas innovation means to increase productivity and ultimately GDP or wealth, along with employment, requires reflection of all of us who claim to remember that natural resources are limited and that the goal of increased production must be analyzed from the perspective of sustainability.
In the field of public administration, innovation is a strategic approach to exploit the great potential for development of a large number of policies such as energy, health, public transport, education and agribusiness. And can do so by entering a vision friendly and sustainable natural resources.
However, while the accumulation of scientific and technological knowledge is really easy to measure through the activity of research and development (R & D), It is more difficult to predict the ability to become innovation, only through productive activity and so that economic growth. We know through indirect measures that knowledge, based on innovation, is key to a better and faster growth, but still do not know the precise mechanisms that make innovation and spread it.
The theory of market failure points some of the obstacles that may adversely affect innovative activity and the functioning of the innovation system: the uncertainty intrinsic to innovative activity, the difficulty of appropriation of the results, meeting frequently with the innovative inability to prevent the free use of it (public good), the favorable impact on other activities, sectors and economic growth itself and competitiveness of the economy are the diffusion of innovations (positive external economies), which does not necessarily affect the generator of innovations. In sum, these observations indicate that, without government intervention, innovative activity is insufficient from the social point of view.
But also true that the process of innovation is not exclusively determined by market forces instead, for its effectiveness is absolutely necessary functioning of the Science – Technology – Enterprise (innovation system), in which the market is only one hand and have to join organizations and networks.
Thus, the ultimate success of the innovation process depends not only on innovative agents individually, but generally is a result of effective interaction of all agents in the innovation system, from universities and research organizations up the companies and centers of technology transfer processes.
Conclusion:
From my point of view the European R & D can not and address itself to all the challenges posed by modern society. Europe’s competitiveness and ability to create jobs and wealth are in the hands of all of us and our ability to work together for the common welfare of European citizens.
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In October 2012 the European Commission has introduced key topics under a new initiative called Innovation Union, of which the subject of increasing social benefits is of important issue. In the following I will take a critical look at one of the four subsections named Social Innovation.
In relation to social needs like working conditions, education to community development and health to strengthen civil society, social innovation refers to new concepts, ideas, strategies and organizations.
The concept finds its roots in the long tradition of Innovation as a driver of competitiveness of institutions and regions.
Social Innovation takes place between the public, private and third sector.
Learning networks such as pilot actions have been set up at EU level with the objective to act for and with the community towards development and a higher quality of life.
This is to be implemented by developing capacities and support infrastructures that assist public administrations in raising awareness of the value of social innovations, providing financial support to social innovators, giving a good example across national borders to share experiences and scaling up successfully tested Innovations.
In this relatively new field of Innovation, the EU has an important role to play. It is to inspire solutions to all European countries by the good practices in some EU Member states. To see the possibility of Social Innovation offering a way to approach social challenges when the market and public sector do not respond to the social needs.
Unlike most economic topics, Social Innovation is motivated by social needs rather than profit. Considering the increasing weight of education, health and social work in both employment and GDP, there of course is a rising economic impact.
A main problem arises in the implementation of Social Innovation when it comes to the limited financial support and insufficient technical skills necessary for organizations to develop and deliver social innovation.
I am of the opinion that there is a real need and potential for Innovation in the public sector, in order to deliver services of new and superior quality that respond to the users needs and expectations the efficiency of the public sector needs to be increased.
At present, Social Innovations have become indispensible and will be even more so in the future. Otherwise, peace and development would be at risk in a global society with problems such as climate change and the growing income disparity.
Also the Example of endless knowledge-based technological Innovation is indeed still valid but has been fundamentally revised, therefore we must not only focus on economic innovation.
Europe should participate in this new field of initiatives and follow Countries like the USA and Canada so it can among other things take the lead in this vital evolution.
“The most urgent and important innovation advance in the 21st century will take place in the social field. Technical innovations will continue, of course, and bring about a materially and immaterially utterly changed environment and new living conditions in comparison with previous possibilities; but the social innovations will be those that the inhabitants of this world must first produce or ensure” (Hochgerner 1999, 37)
To conclude it can be said, that despite the high importance of Social Innovation, Innovation ought to be economic, social and environmental at the same time.
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When speaking about his Growth Agenda, the republican candidate at the presidential election, Mitt Romney, said: “We must reform America’s legal immigration system to attract and retain the best and the brightest, and equip more Americans with the skills to succeed.”
First, I don’t think that the real problem is the legal immigration system, because the US are still attractive for students and workers. If you are one of the top guys on a particular topic and you want to work or do some research in America, you won’t have a lot of trouble to go there, doors will even open from themselves.
On the other hand, I think that innovators and researchers follow a trend: companies make investments in countries where it’s benefic and advantageous for them, those countries adopt the new technics and technologies to develop themselves. They become thus attractive for innovators and researchers. In this case, American firms went to Asia because it was cheaper to produce there and the labor constrains were lower than home. Asian countries used what they learned from those firms to help their country grow. Now those countries are as attractive as the USA for innovators and developers.
So to “attract and retain the best and the brightest”, the USA shouldn’t have invested in foreign countries and should have kept their technology for themselves. In order to be attractive as they were, they should encourage and promote foreign firms to locate in the country.
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The Lisbon Treaty calls for the establishment of the European Research Area (ERA), a grand undertaking seeking to create a unified research area in which the free movement of knowledge among public and private institutions is facilitated, encouraged and rewarded. The European Commission has set itself the ambitious aim of concluding this project by 2014. The ERA, as one of the cornerstones of the Innovation Union mentioned above, is meant to promote Europe as a knowledge based power, to enhance its competitiveness, increase the number of innovations and thereby promote economic growth.
The Solow Model, as well as endogenous growth models, have emphasized the importance of innovation. And are an excellent departure for in depth analysis of economic growth. Some very renown models tell the story of workers and researchers, and the spillover effects the latter generate. To me, this point is crucial. Although endogenous models may be arguable, they convey the important message, that it’s not all about how much research actually materializes, or the funds directed towards it. Knowledge spillovers are directly conducive towards the technology growth rate, and therefore a key driver of economic growth. The benefits of making an effort to enhance cooperation between different institutions may prove to be equally valuable to the development of Europe, as more research facilities or increased funding. The 2012 Communication by the European Commission evidently lays emphasis on spillovers, given that the ERA is exactly the kind of Open Innovation platform, which would unleash their potential as economic growth factors. Having said this, the question arises whether the measures proposed, and set in operation by the EU are too eager, or even require additional effort.
Some may argue, that increasing interaction between varying research platforms may in fact lead to less research. This has also been shown empirically: two researchers working on comparable projects may in fact prove reluctant, if only one of them can reap the benefits. Nevertheless, I believe the improved funding and increased Europe-wide mobility targeted by the European Commissions Framework programs could do away with these effects in the medium run. The reason being, that this particular form of disinclination results primarily from limited opportunities within the market for innovations. Yet an example of an EU policy preventing this from occurring would be ERA-NET, which could potentially increase competition when needed or ensure cooperation whenever desirable.
Furthermore, I believe the ERA may, in fact, not be ambitious enough. Although the EU Commission explicitly wishes to increase the number of public-private partnerships (PPP) and encourages the privates sector to voluntary develop an improved business-academia mobility, I believe that in the end the private sector may not be involved enough. And this, I consider to be an important point: it’s not just about spillovers and ideas and innovation, it’s also about who carries them out and where they are put into practice. Large Companies may be in favorable positions to innovate, and new ideas should find their way there. With respect to these enterprises, this may imply incentives that encourage companies to remove internal barriers to open innovation, while still protecting the knowledge generated. For small companies or start-ups, Europe often lacks the kind of financial infrastructure (esp. venture capital in this context), which could sustain the effort to innovate.
In conclusion, innovations are a key driver towards economic growth. The European Research Area as a project is beyond desirable and will in my opinion be crucial to an improved network of ideas, which may spur Europe’s innovative capacity. However, I believe it should lay even more emphasis on cooperation with the private sector, alongside better, but reasonable, incentives for the latter to seek cooperation.
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In light of the “key initiatives” published by the European Commission in Octobre 2010 and its Europe 2020 initiative, Innovation Union, I would like to talk about a subject only partially – and therefore in my opinion insufficiently addressed – by the these key initiatives: namely European Entrepreneurship.
In an article published on the 26th of July 2012 in the Economist the author makes an excellent case for why Europe is not producing as many new and successful countries as e.g. the United States or China. According to an article by Nicolas Veron and Thomas Philippon, members of think-tank called Bruegel, only 12 big new listed companies have been created in Europe between 1950 and 2007. In comparison the United States have managed to produce 52 in the same period. Of the adult population of France and Germany only 5.8% and 4.2% can be classified as “early-stage” entrepreneurs, numbers that pale in comparison to America’s 7.6%, China’s 14% and Brazil’s 17%.
The article identifies various reasons, which I will condense into three main points. (1) The lack of risk-taking entrepreneurial culture in Europe, (2) insufficient financing for European start-ups and (3) bureaucratic issues (e.g. rigid labour law, a restrictive bankruptcy laws).
The first point is more of a psychological phenomenon, which is probably connected to post-WWII risk-aversion in Europe, seeing as plenty of big companies were founded in the 19th and 20th century Europe prior to WWII. It will be hard for the European Commission to attack a problem so deeply rooted in today’s European culture and maybe not the most advisable issue to meddle with, since encouraging risk-taking with policies can result in a lot of inadequate business ventures, if not done with the utmost care and precision.
Of these three points, the only one addressed by the program is (2) financing for innovative companies in the key points 10-13. Financing is extremely hard to come by for entrepreneurs trying to set up a new business in Europe. Venture capital appears to bear too many risks for European institutional investors. For an asset class such as Venture Capital, which invests into companies at a very early stage and thus communication is essential and has to be as easy as possible, operating in the same language and culture is important. This means that financing from abroad will not be able to compensate for a lack of financing from European investors. This is why the measures to be implemented by the European Commission such as creating financial instruments to increase private financing of innovative companies or facilitating the investment opportunities of Venture Capital funds throughout Europe are very important.
The final point (3) the bureaucratic issues should definitely enjoy more attention from a program, aimed at boosting innovation in Europe. In Germany honest bankruptcy can hinder an entrepreneur from starting another business venture for 6 years on average, whereas in the US the process is usually complete in less than a year. Another issue is rigid labour law, which prevents start-ups from being able to lay of workers quickly in a turbulent market environment, in which a new company will undoubtedly be positioned. An issue to solving these issues will of course be the necessity for EU members to cede certain degree of authority over subjects, traditionally a part of national politics, to a higher entity.
To sum up, in my opinion European Entrepreneurship does not receive the attention it deserves, although the program does consider the issue partially by attempting to remove obstacles to financing for innovative companies. Although the issues may be hard to solve, especially in light of recent disunity between EU members over certain political decisions. Getting European entrepreneurs back onto their feet should be a main goal in a political agenda focused on fostering economic growth by promoting technological innovation in Europe.
For more in-depth information I highly recommend reading the article form the Economist:
Show lesshttp://www.economist.com/node/21559618
Thanks for the link. Note that the LSM (jointly with other departments of UCL) offers the program CPME, which is oriented towards entrepreneurship and the creation of SMEs.
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Creating a single innovation market
I would like to express my option on one of the key initiatives taken by the European Commission and listed in the Communication on Innovation Union published on 6 October 2010(http://ec.europa.eu/research/innovation-union/index_en.cfm?pg=action-points).
“By early 2011 the Commission will present an eco-innovation action plan building on the Innovation Union and focusing on the specific bottlenecks, challenges and opportunities for achieving environmental objectives through innovation.”
Investing in an eco-innovation action plan can boost the European Growth at a long term point of view while protecting the environment.
“Eco-innovation plan” would include all the progress in terms of sustainability and environment. In other words the plan would encourage the nations to act together more responsibly for the planet, and protect the public goods.
I tend to think that a single eco-innovation market would encourage the members of the EU to work on a common project and would boost the economic growth at long run.
Nowadays, due to the financial crisis the companies are more likely to focus on profit in order to keep the head above water. What’s more, in different sectors the market is very competitive and enterprises overseas are already leading the international market and there is not space for small EU enterprises to enter.
This plan, would developed in the EU a key value and make the industry more competitive at long run which would boost the employment in Europe and in this way assure a future for the public goods.
More over, investing in “eco-innovation” requires a lot of financial resources and in time of financial crisis, individual EU members are less likely to invest resources for sustainability R&D. By acting together, the EU could raised funds easier and help smaller project to be developed which would encourage people to think more eco-friendly in their daily life.
In a nutshell, Creating a single innovation market, and following an eco-innovation action plan “will contribute to achieving environmentally and socially sustainable growth in the longer run and, indirectly, economic recovery in the short-term. ”
source : http://ec.europa.eu/research/innovation-union/index_en.cfm?pg=action-points
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I would like to comment on the topic of climate change which was debated in the Science Debate between the current president Mr. Barack Obama and Mitt Romney.
Show lessThe funding on energy research and the promoting the work of organizations like ARPA-E has been supported by both the candidates. However, the candidates differ markedly on the issue of development and creating a market of new energy technologies. The current administration supports cap and trade mechanism, fuel economy standards and wants to promote renewable energy sources like Solar and Wind Energy. The key policy here is to reduce the carbon dioxide emissions. The Democratic Party strongly supports this stand and to significantly reduce the pollution that is causing the climate change.
President Obama has strongly supported cap-and-trade system (A system that is meant to reduce certain kinds of emissions and pollution and to provide companies with a profit incentive to reduce their pollution levels faster than their peers.). The limits upto which the carbon dioxide and other gases can be emitted is set and utilities are given free market incentives to reach the limits. The goal is to have “clean energy standard” which aims to achieve as much as 80% of electric generation from sustainable or nuclear energy sources which have few carbon releases. The alternative source of that energy would be high technology gas fuelled and coal powered generators that cause very less pollution.
Even in his last election campaign, Barack Obama supported clean energy through his “New Energy Plan”. The plan sought to invest in renewable energy sources, reduce reliance on foreign oil, address the global climate crisis, and create jobs for US citizens.
The concept of clean and green energy will be accepted by the US citizens if implemented in an economically viable manner. However, it might face opposition from coal-reliant utilities.
Most of the things said by the current president are more or less a repetition of what he had said in his last election. A few policy measures president Barack Obama and their impacts are discussed below:
a. The natural gas is a cleaner fuel and according to experts should last at least 100 years.
New tax credits have been proposed for vehicles that run on natural gas and will be good news for companies like Chesapeake, Devon and EOG. As a result of increased production, the prices of natural gas have decreased in the past few years.
b. Federal standards will be raised for fuel efficiency of cars and light trucks to seek to reduce greenhouse gas emissions from fossil fuels due to climate change concerns. There will be a focus on Clean Air mandates and the $4 billion in tax breaks for the oil and drilling companies will be eliminated.
c. New leases have been offered for oil drilling in spite of recent BP oil spill case. This shows the attitude of the administration that it is not opposed to the non renewable sources of energy or unduly in favour of agenda that promotes renewable.
d. Coal and nuclear energy don’t find direct mention in the policies but they have not gone unlooked. There is an $8bn loan for a new nuclear plant in Georgia and Obama is supporting clean coal but has moved forward for clean air laws that might shut down some coal fired plants.
e. In case of renewable energy sources like wind and solar, the current president will be extending tax credits that will give the firms as much as 30% subsidy and will allow the corresponding companies renewable projects on its lands. Energy from solar and wind, though constituting a relatively smaller art of total production has increased threefold in the past 4 years. The Oil and natural gas production has increased as well due to rise in the oil prices. If the present trend were to continue, the imports of oil and natural gas will decrease significantly in next 8 years. This is an important point because Mr. Mitt Romney has opposed the subsidies to these renewable sources and has called them unreliable. Though he has supported the support to research and development in this area, he considers the risks too high and rewards highly uncertain to attract investments.
In the long run, the sustained investment in clean energy along with the economic stimulus program will lead to a decrease in the energy costs and an increase in competitiveness and in the number of jobs. It will also reduce the dependence on non renewable sources of energy and will be highly beneficial. The consumer and environment will benefit as a result of these policies and businesses flourish when the consumer benefits.
Good and thorough analysis. Next time, don’t forget to quote your sources.
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I will give my opinion about one particular measure that the European commission will put in place future. This measure is about pooling forces to achieve breakthroughs: European innovation partnership.
The thing that I found interesting in that commitment is that they want to radically cut the CO2 emission and other sources of pollutions in city and to found alternative source of energy which will substitutes increasingly scarce raw materials.
In my opinion, this commitment is one of the most important of the list set by the European commission for two reasons.
First of all, we all know that fossils energy will be soon not available and so it’s primordial to find new solution to substitute it. Moreover, it could be attractive in term of growth that we control the future “global” energy (mean use all around the world like fossil energy today). It is for us to be in leading position in term of using the new energy technology in order to ensure we will be a major player in this key future issue.
Secondly, I think that innovation is long term investment. It is never asked the research and devolvement unit to have immediate results but to invent, think or create the new revolutionary idea or technology that will bring a future competitive advantage. In this view, I think that the major factor that will bring a competitive advantage to a country or enterprise in a near future is the mastery of news energy and technology to use it.
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As mentioned in this blog, science, technology and innovation are essential elements toward economic growth. This makes me want to highlight the importance of education for youth in these three specific fields.
During the debate on the 4th of September 2012, held on ScienceDebate.org, Presidential candidate Obama proposed measures regarding education in the United States. I took a particular interest in his policy measure to “establish new national STEM Master teacher corps in 100 sites across the country and expand it over the next 4 years to support the best STEM teachers in the nation”. In my opinion this measure could be a concrete step toward what Obama see as “Educate to innovate” as well as continuity to his previous decisions on that matter such as his goal to “add 100,000 STEM teachers over the next decade”. It’s a progressive measure which I think will be beneficial in the long term.
With this measure, Obama wishes to “strengthen the STEM education”, an educational system already in place which provides the students knowledge, skills and understanding in the fields of Science, Technology, Engineering and Mathematics (for more information http://www.isa.org/InTechTemplate.cfm?template=/ContentManagement/ContentDisplay.cfm&ContentID=83593 ). These fields are directly linked with innovation which is a necessity, now more than ever, to differentiate oneself in a very competitive market, to stay on top and to advance. This will then have an impact on the economic growth. Moreover, by prioritizing this measure, I believe it will also have a positive impact on some other measures related to science (for example innovation and economy, climate, R&D, energy, etc.). More precisely, I think the STEM education system will provide the tool for the students to become skilled assets who will in return contribute to the development of a specific field.
Nevertheless one should think about the feasibility of this measure. Funds should be placed and invested carefully. This can be hard to see with long term projects since the results are not directly visible. Also, for this project to work it is important to have qualified teachers in these fields; and students should show some interest in following this program. Indeed, it is important that a correct and skillful education is given from the beginning because students will build up their knowledge on the basis they have.
To sum it up, despite the risk of a bad investment in poor quality, this new measure, if well established, will surely bring an improvement to the educational system and prepare the new generations with tools they can use to face the challenges of the future as well as “the tools to out-innovate and out-compete the rest of the world”. (see ScienceDebate http://www.sciencedebate.org/debate12/ ) .
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The reading of those different documents is particularly interesting to get an overview of the problem of the innovation across the European member states. I would like to focus my point of view on one of the key initiatives which was listed in the “Communication on Innovation Union” published on 6 October 2010. This focusing will be the “Reforming research and innovation systems”.
The proposition is that “Member States are invited to carry out self assessments and identify key challenges and critical reforms as part of their National Reform Programmes. The Commission will support this process through exchanges of best practice, peer reviews and developing the evidence base. It will also apply them to its own research and innovation initiatives. Progress will be monitored in the framework of the integrated economic coordination (‘European semester’).”
In my opinion, reforming research and innovation systems can lead to a better efficiency and it could be the way of an economic growth which is very important regarding to the current economic context. European member states have a lot of individual talents across this big continent; building a bridge between those different talents is for me an imperative. Improving the communication between the researchers will drive to a better optimization of innovation processes.
For me, merging the individual efforts and the individual competences is one of the key to succeed in the innovation and it is also a method that can decrease the waste of money and time. Creating a pool of innovation into the Europe, managing the different programs into a single institution seems to me a beautiful challenge.
A change like it is extremely difficult to put in practice. To my eyes, the bigger issue is the privacy of the different researches made into the companies. However, the European institution can create a tool – thanks to the new technologies for example – which increase the communication between industries. My point of view is that there is some waste of money and time because some companies spend a lot of money to reach the same goal. A public and independent institution can help to coordinate it.
The main issue of the success of the reforming is for me the resistance of companies which protect their owned innovation as a treasure and we can understand it. Some rules have to be made and if not, the project of the European commission will stay a dream… But for the health of the economic growth and the European competitivity, it has to be a reality.
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I choosed to discusss the “Innovation Priorities For Europe” addressed by Mr. Barroso to the European Council on February 4th 2011.
In 2011, Europe was (and still is) in critical situation but it tried to maintain a sufficient level invest in innovation. The european share of GDP on R&D was 2% and the target was only 2,7%- 2,8%. However in net spending, China will spend more than the EU by 2014. More efforts and measures have to be undertaken in order to face the increasing competition!
In order to boost innovation spending toward R&D, EU will undertake 4 major steps according to Mr. Barroso.
For each point I will give my opinion.
1. Smart Fiscal consolidation
Barroso wants a “rigorous fiscal consolidation and growth-friendly expenditure”.
Personnally I think it’s more easy to say than to actually apply it in reality because the tax system in Europe is complex and not homogenous. Some memeber states (e.g. Belgium) have a very complex tax sytem which can complicate the innovation. On the otherside the Amercian Tax System is way more simplier and efficient, which contribute to facilitate innovation.
2.Improved framework conditions
-Volonty to create an homogenous EU market for evnture capital funds
-Faster setting of European standards
-Increase of pool of excellence in areas of societal concerns (cf. first Innovation Partnership “Healthy and active ageing”)
-Best practices in using public procurements
I agree with all the subpoints listed and agin the challenge will be to uniformized the rules and put all the engeries of all member states together
3.Steer and monitor at EU level
It is important to clear the role for the European Council to steer progress. The overall 3% R&D target has to be used as acompass. Complete the European Research Area by 2014 by unnblocking deal to ensure full mobility of researchers, and by attracting new talent.
Very relevant point because the number of institutions and particular tasks assigned to each of them can be confusing. But clarifying the role at the upper level of EU can boost innovation.
4. Future-oriented EU budget
Show lessA common strategic framework to pool resources and facilitate joint programming.
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With references of Obama’s answer to the Top American scientist Questions, Sep, 4,2012, I will give my opinion about his policy of preparing 100,000 science and math teachers over the next decade, as a solution of ensure America remains the world leader in innovation in the following paragraph.
Nowadays, with shortage of natural resources and increasing degree of pollution, the economic growth is facing a serious problem. According to the research, economic growth was mainly depends on industries using raw materials and energy to product, the dependence on natural resources are more than 60%. However, in the knowledge economic mode, which would based on invention, innovation and high technology, the dependence of nature resources is less than 20%. For instance, in 1960, the total consume of steel in the U.S was 1.2 hundred million tons, while in 1990, the GDP increased 2.5 times, the total consume of steel was only 10 million tons. Knowledge has replaced nature resources’ indispensable position and becoming the main resources over the years. Thus, I believe that developing innovation and knowledge economic would be one of the most practical solutions for lack of raw material and keep sustainable economic growth.
The essential step to achieve knowledge economic is developing human resource. We already know that knowledge is the main source of economic growth, but whether knowledge could transferred into economic value or not depend on the conversion rate of the knowledge productivity, that is, how much knowledge could be transferred into economic value is an important indicator to measure the rate of economic growth. To transform the knowledge into productivity, the workers have to be educated and then apply innovation in their industry, to improve production equipment and methods, improve efficiency by using their skills. Therefore education is an important part of knowledge transforming, through education, the existing knowledge was taught to workers, and then new ways would be innovated by them to promote the productivity, hence promote the economic growth.
To conclude, this policy of increasing 100,000 teachers would in the long run improve the quality of workers, training innovative spirit of the labor, being more efficiency and increase labor productivity. It will reform the production structures by conserve resources, create new materials, and thus meet sustainable economic growth.
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In recent research literature (e.g. Aghion et al., 2005) competitiveness on the product market has been identified – among others – as one of the main incentives for firms to increase their investments in R&D. Uppenberg (2009) provides a brief explanation: Companies aim at setting themselves apart from competitors in terms of price or quality of the product to gain market power or simply to retain at least some rents. This is called the “escape competition” effect (Aghion) which becomes especially import in so-called “neck-and-neck” industries – a branch with firms on a comparable level of technology.
From this point of view I would like to emphasise Commitment 23 from the list of key initiatives published by the European Commission in October 2010. Its basic intention is to redefine the role of standardization agreements between two or more firms with simultaneous consideration of competition aspects. In my opinion this is an example of a successful implementation of theoretical results into practice.
Standardization agreements determine certain product characteristics of technical or qualitative nature. This leads to a substantial increase in the comparability and makes it easy for the consumer to substitute one good for another. Increased consumer choice and rising competitive constraints could eventually cause lower prices. Furthermore, consumers benefit from network effects, meaning that the group of people using the same product grows steadily. Taking this into account, it becomes quite obvious that enhanced investments in R&D act an essential part in order to remain competitive. But, apart from this, it appears to me not just essential for survival but also worth doing: A slight reduction below competitors’ price enables the firm to gain from a significant increase in market power.
On the other hand standardization agreements could give rise to competition law concerns – and this is the very tricky part of the Commission’s proposal. One can easily imagine that involved firms try to use such agreements to manipulate prices or the amount of output. Moreover standardization goes hand in hand with a reduction in the variety of products. Another point I’d like to mention in this context is the great danger of setting a standard of technology that includes somebody’s Intellectual Property Rights (IPR). This person would become immediately some kind of gatekeeper for the entire market, deciding on entry and exit of other firms.
To sum up, I have no doubt, that Commitment 23 is one of the most ambitious and promising goals of the European Commission. Promoting incentives to invest through a strong competitive environment seems to reflect best what research has found out in theory. Nevertheless, one has to be aware of the possible negative outcomes of this extremely risky approach. Instead of increasing incentives for firms to invest one can easily create situations which hamper investments.
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According to the website “ScienceDebate.org”, more than half of the growth in the United States since the end of WWII is due to breakthroughs in science and technology. If the two presidential candidates are aware of the importance of innovation in the growth of the U.S. economy, their proposals on innovation policy are radically opposed. This is what is apparent from the answers given by both sides to the questions “on some of the biggest scientific and technological challenges facing the U.S.”.
While Barack Obama advocates an interventionist policy of the state by strengthening the financing of government agencies responsible for science and technology and promises to invest in science education in the United States (with the goal of “forming” and recruiting and 100 00 science and math teachers for years to come), the Mitt Romney’s party put on a policy of free enterprise in the field of research and easing regulatory procedures.
I will focus here on a particular measure of President Barack Obama, perhaps the most important since the beginning of his nomination in 2008. This is the “American Recovery and Reinvestment Act of 2009.” This recovery plan of the U.S. economy aims at fostering economic activity and growth in the long-term. And it’s mostly based on stimulating innovation through the support of research efforts: the Obama Administration has released no less than $8,9 billion to fund research, an impressive sum which was divided among several government agencies ($3 billion for the “National Science Foundation”, $2 billion for the “United States Department of Energy”, …) and academic research centers ($1,3 billion). (For more information about “Recovery Act”, see : http://www.recovery.gov/About/Pages/The_Act.aspx)
Despite mixed economic results, if there is one thing on which we cannot blame the mandate of Barack Obama is that he is consistent in its policy of innovation. Indeed, proposals for its 2012 election campaign are a continuity of what he has begun to undertake with the “Recovery Act”:
The first question on “ScienceDebate.org” about Innovation and the Economy, Obama answered he intended to double “funding for key research agencies in order to support scientists and entrepreneurs so that we could preserve America’s place as the world leader in innovation, and strengthen U.S. leadership in the 21st century’s high-tech knowledge-based economy.”
To remain the world leader in innovation? In order to be competitive against emerging powers, the outgoing President makes it a central point in his candidacy. Unlike his rival that he proposes to reduce the budget for investments for the future in areas such as research, education, health and the energy.
Until now, through the action plans of the “Recovery Act”, $100 million has been invested to support innovation in strategic sectors such as, education and training, health, information technology, and clean energy. Obama declared that of the $100 million, $90 million were invested in clean energy and expected a return of $150 million. He finished by saying that it is “the largest investment in clean energy in the American history”. And the investment covers not only research but also the implementation of these new technologies.
And I want to emphasize on this last point. As stated at a conference, Michael Dell, the founder and CEO of Dell, “innovate, it’s easy. It is more difficult to transform innovation into a real business.” The research and development are very important… such as the ability to implement the product of this research into the market. Although the project of Democrats for stimulating innovation is built on good basis, I think they could develop more action plans to facilitate an efficient implementation for all the research (and not only for clean energy projects).
Finally, if re-elected for a second term on November 6, President Obama and his Administration promise to continue investing in innovation. Ultimately, they hope to invest more than 3% of GDP in public and private R&D. While the country has one of the biggest crises of its history and they would still need to obtain the approval of the legislative power for the budget, will this current economic climate allow them to hold on their promises?
Sources: http://www.sciencedebate.org/debate12/#1
Show lesshttp://www.actinnovation.com/citations-innovation/citation-de-la-semaine-8-innover-cest-facile-950.html
http://www.lemonde.fr/economie/article/2012/09/17/etats-unis-la-crise-a-etouffe-la-volonte-de-changer-de-modele_1761265_3234.html
http://votonsscience.blog.lemonde.fr/2012/10/05/la-science-selon-obama/
http://www.bulletins-electroniques.com/actualites/70953.htm
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Based on the policy measures proposed by Barack Obama in the Strategy for American Innovation published on the 4th of February 2011, I wish to focus on the importance of sustainable energy investments in a long-term perspective. Sustainable development is by definition long-term, as it aims to meet the needs today’s generation while preserving the environment for future generations. The US accounts for 18% of the world’s total carbon dioxide emissions. Although there are different opinions about the danger of Co2 emissions, more or less all scientists agree on the fact that the earth is getting warmer. As this is not sustainable, there is a need to invest in innovative projects that will help reduce Co2 emissions.
President Obama proposes what he calls a Clean Energy Revolution. As one of the largest energy consumers in the world, his goal is that the 80 percent of US electricity is generated by clean energy sources by 2035. The goal is impressive. It will require a significant change in the American energy consumption. Because of the position the US holds in the world economy, their acts may trigger other countries to follow their lead. But as far as I can see, Obama may face difficulties with the implementation of this plan. First of all, I do not think the companies are given the right incentives to start using clean energy. Second, the definition of clean energy in Obama’s plans does not mean renewable energy, and may not be sustainable.
A well-known tool in economics for making someone do what you want is to give them incentives. If the government wants to increase the use and supply of renewable energy they have to invest larger shares in renewable energy. But they also depend on private investors doing the same. They need to give investors an incentive to invest in renewable energy projects instead of fossil fuel. A study by Environmental Law Institute shows that the federal government provide substantially larger subsidies to fossil fuels than to renewable energy, mostly through tax deductions. Oil companies can deduct more or less all their costs related to oil exploration and drilling, which makes it relatively more attractive to produce oil than renewable energy. As long as the government hangs on to this old practice, investors are given no incentives to switch to renewable energy. There will of course be higher costs related to investing in renewable energy than oil exploration, but I believe the government need to give the investors a greater incentive to make them prefer renewable energy projects. Obama already suggested cutting the subsidies to the oil companies, but the republicans rejected the suggestion. Obama will have to continue trying to remove the tax deduction, or he can increase the subsidies for renewable energy so that it becomes as attractive as oil investments. The US is already in deep debt and will have to carefully prioritize their investments. That is why I believe it is important to give investors incentives that make them indifferent between investing in fossil fuel or clean energy.
Furthermore, although Obama states that he will focus on clean energy sources, several people raise the question whether all of these sources are actually clean. It is important to distinguish between Clean Energy and renewable energy. The term “Clean Energy Sources” includes clean coal and natural gas while renewable includes sources like solar and wind power. Natural gas is seen as a risk-free solution to the American dependency on foreign energy (propublica.org), but research shows that they drilling can cause hidden environmental costs.
I cherish Obama’s focus on clean energy and I believe the goals are possible to achieve if investors are given the right incentives to provide financial support to innovative projects. But in terms of sustainability, it will require more research on whether natural gas and clean coal is actually clean or if it is just a semi-productive strategy.
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I want to offer my point of view regarding the initiatives proposed by the European Commission, focusing on “Spreading the benefits of innovation across the Union”.
Show lessThis initiative concentrates on 2 main issues:
1. Member States should considerably improve their use of existing Structural Funds for research & innovation projects, helping people to acquire the necessary skills, improving the performance of national systems and implementing smart specialisation strategies and trans-national projects.
2. Member States should initiate the preparation of post 2013 Structural Fund programmes with an increased focus on innovation and smart specialisation.
Basically, European Commission, through this initiative, is trying to encourage the member States to use a higher percent of the Structural Funds for R&D and innovation. A study made by KPMG on Structural Funds (http://www.kpmg.com/RO/en/IssuesAndInsights/ArticlesPublications/Press-releases/Documents/EU%20Funds%20in%20CEE%202011_KPMG.pdf) in countries from East and Central Europe shows that less than 10% of the funds are allocated for R&D and innovation. The real problem is that only about 50% or less of these funds have been contracted (not paid !!) by these countries. Furthermore, the average payment ratio for the structural funds in generally is about 20% ! So, some EU member states are finding very hard to absorb the funds.
One reason of a low percent of contracted ratio and a low payment ratio may be that the steps of how to contract Structural Funds are not very explicit for the population. Governments should struggle much more on explaining which are the steps, the requirements, and the risks.
One other problem may be the complicated process. Before wanting to focus the funds on a specific field, European Commission should simplify the contracting process. For example, in Romania, after you finished your project, you need a regional approval regarding the legibility of the project, after that a national one, and finally one from the European Commission. Thus, to avoid fraud there are three bodies which are doing the same thing. This structure of the process is slows the way to the expected result. For example, from the moment 0 when you finished your project and you have all the required papers till the moment 1 when the project is approved and the funds are absorbed, can pass more than a year. If we talk about R&D and innovation more than 1 year can be too much and you can lose your advantage. Of course, these are free money, but for a faster development companies may look for other sources of money. Basically, the long waiting for money can discourage.
Finally, in my opinion, the verification and acceptance process should be revised and modified to encourage the absorption of the funds, especially if you want to encourage the level of funds for R&D and innovation and the contraction and payment ratios. This is an area where time may be everything, and other sources of money, even if they are more expensive, could be preferred only because they are faster and the related profits can easily cover these costs.
Interesting perspective, thanks.
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With reference to the education reform policy proposed by U.S Presidential candidate Mitt Romney, where he speaks about supercharging America’s current lagging K-12 education system and making its higher education more affordable for its students, I would like to offer several comments.
It is no doubt that innovation is not just about attracting top scientists, reducing R&D taxes and introducing regulations to foster innovation. To create a culture of innovation which is sustainable, it starts from the heavy investment on human capital, which is what Mitt Romney proposed. However, this process will take many years before one can see the fruits of labour because it is about changing people’s mindsets, and creating a new generation of graduates who have the innovative mind.
This is not to say that the education reform policy is a one man show. It will work hand in hand with the other policies which he proposed, to finally make an observable difference many years down the road.
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I would like to give my point of view about the Program that Barack Obama established for stimulating innovation.
“The Science, Technology, Engineering, and Mathematics (STEM) enterprise is the driving force for U.S. and global economic and social advancements”. The first workshop of STEM was held in october 2009.
This program is mainly based on teaching the new generation so that they can create an environment where invention, innovation and industry can flourish.
First of all, to lead to innovation, we first need to educate people because education is the fundament of life. When people have sufficient knowledge, they are able to invent and then to innovate in many sectors.
Secondly, as the world biggest economy, the U.S wants to maintain their leading position even though the economic crisis hit them a lot.
Moreover, in the Science debate, Obama spoke about his campaign “educate to innovate” which “is bringing together leading businesses, foundations, non-profits, and professional societies to improve STEM teaching and learning”. We can see that Obama, constantly emphasize the fact that education is a very important point for innovating and then help the economic growth.
To conclude, as a african, we don’t see innovation in our contries, because of a lack of education and therefore innovation. This plan (STEM) is valuable and to make it work it needs government support.
Show lessThanks. It is also very interesting to have the point of view of developing countries.
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I would like to give my point of view about the program supported by the Democratic outgoing President, Barack Obama.
Innovation has always been one of the main drivers of the American economy and it is estimated that no less than half of the economic growth in the United States comes from scientific and technological progress. Now we are able to better understand why issues related to innovation are very important in a campaign for the presidential election.
Barack Obama has decided to continue the United States’ current program, therefore continuing its projects in terms of financing innovation through research agencies. I think these agencies are essential to America so it remains a world leader in innovation, but that they should not be the only ones to be subsidized. Indeed, innovation doesn’t come only from big companies such as NASA, NSF, USDOE or different universities, instead it can come from smaller companies. So I think that these agencies recognized worldwide should be helped by smaller innovative companies which could reach dizzying heights. The best American example of an innovative success is undoubtedly Apple. In effect, this multinational corporation created in 1976 in a garage does not come from one of these agencies and is now the reference in innovative companies.
In summary, on one hand I think that free-enterprise is a good driver for innovation, and we should encourage it (give a variety of benefits to qualified persons wishing to innovate in United-States and to the firms concerned for example). In my opinion, the development of cooperation between public agencies and private companies could therefore be favorable to innovation.
On the other hand, Barack Obama wants to take the issue of innovation from the source and instead train 100,000 more teachers in science and math over the next 10 years. I think that this is an excellent measure for the innovation of tomorrow, beginning today. America will have highly qualified people in the coming years and innovation will be further promoted. Education is one of the most important drivers for the development of innovation and it is essential to encourage it.
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First of all, it is worth mentioning the importance of I³S (Innovation Union Information and Intelligence System), the European Commission Platform, with the aim to inform about implementation of Innovation Union (IU) commitments. It allows the stakeholders (including EU member states, industries, residents, etc.) to get acquainted with the commitments and moreover, to benefit from reports when applicable in taking decisions. On the other hand, EC has to make sure information is frequently updated and promoted to the audience to stimulate its efficient use.
The 34 commitments addressed by IU are grouped within 13 types ranging from promoting excellence to creating single innovation market, measuring innovation progress and others. I would like to focus on Commitment 20 – Open Access to Research Results/Research Information Services:
“The Commission will promote open access to the results of publicly funded research. It will aim to make open access to publications the general principle for projects funded by the EU research Framework Programmes. The Commission will also support the development of smart research information services that are fully searchable and allow results from research projects to be easily accessed.” (http://i3s.ec.europa.eu/commitment/26.html)
The realization of this commitment would benefit public and private institutes in several ways:
– by providing overview of recent research in a given domain
– by providing access to empirical data as an input for on-going/future research
– by identification of researchers active in a given domain, thus stimulating cooperation
Making publicly available empirical data gathered from firms might not be in the interest of firms participating in data collection process. Thus, measures should be taken to ensure data confidentiality and still encourage firms to participate in publicly fund research.
Smart research information services enable different institutes, universities, governments, companies and individuals to seamlessly access for use, re-use and trust scientific information (http://i3s.ec.europa.eu/commitment/26.html, tab: implementation). It can become the portal to search for publicly funded research when used regularly and adopted by diverse public and private users. When portal usage together with user profiles (sector) are tracked and further ‘data mined’ rankings can be made to determine the research topic interests per industries (e.g. number of downloads and searches for a given topic). This could help to set priorities when publicly funding research projects.
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The policy measure that I have chosen is: Promoting excellence in education and skills development, related to the issue linked to the growth of the Innovation Initiatives. It comes from the program proposed by the European Commission, called Communication Innovation Union and published on 6 October 2010. http://ec.europa.eu/research/innovation-union/index_en.cfm?pg=action-points
In this way, people will be better trained and researchers will be more competent. For example, universities should focus more on interdisciplinary and entrepreneurship. There are already some programs that promote this at UCL.
It should also promote e-skills, because internet takes pride of place increasingly important nowadays. For example, it can be based on partnerships with stakeholders or through university lectures. The level of e-skills in Belgium compared to other countries is good, but it is possible to do better. Norway ranks first. http://i3s.ec.europa.eu/commitment/4.html Knowledge exchange between the two countries could be a solution. In addition to exchanges between countries, there may also exchange of knowledge between researchers and people who work in companies for example. This would increase the knowledge base
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To summarize, I find that this policy is very important because education plays a major role in everyday life. The development of knowledge can only be beneficial to innovate.
Hopefully, the cours ‘Economics of innovation’ contributes to the kind of policy you have in mind.
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With the reference to the declaration made by Barack Obama, I would like to react to that giving my own point of view. It goes without saying that the 21st century reaches a huge level of competitiveness between industries in this world of globalization. In this case, one of the best ways to stay in the race is to innovate. Indeed, innovation tends to increase economics growth and I see it like an endless fight between industries. I would like to emphasize this point. Innovation is not limited to continuous technological progress (for example: phone > smartphone > …) but it can also create new needs for the consumer. For instance, one of the best examples is the iPad. As we can read in an article (http://www.treehugger.com/gadgets/i-want-you-useless-ipad.html):
“The iPad is the epitome of the created want. It is a consumer product that fulfills no function that a laptop or smartphone cannot; and everyone who wants to buy an iPad already has one of those things. It is something that we never knew we wanted before, nor ever needed. Everyone knows this. Steve Jobs knew this more than any of us will ever know this.”
Another example is the introduction of social networks like Facebook in our society. Who could imagine ten years ago that it would become such a success?
In this case, innovation gives the chance to every single industry to flourish and become a world icon. Consequently, I see it as an endless war increasing economic growth that can’t be totally won by few big companies.
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Barack Obama’s policy proposal on innovation:
President Barack Obama has ahead of the upcoming U.S. presidential election proposed policies that he hopes can ensure the creation of more jobs in the domestic manufacturing industries. The American economy has been in a downward trend for the last decade, and has of October 2012 accumulated a national debt of $16 trillion (1). Much of this downfall can be explained by the extremely cheap labor found in East-Asian countries, which has seen many American companies outsource their production from the U.S. This has left traditional American industries, like the car manufacturing industry, in a limbo, and for many industries it has been a question of “life or death”.
The American export, being a vital part of the American economy, has declined sharply the last couple of decades, and from 1984 to 2010, the American export has fallen from accounting for 12% to only 8.5% of the value of all merchandise traded worldwide (2). This is an alarming figure, and the American economy stands in front of a (r)evolution. And this (r)evolution starts with a total rebuilding of the American export, so it once again can come back to a competitive level.
On the website promoting the Obama campaign you can find the following text: “Manufacturing is an essential building block of our economy because it sparks innovation, generates higher-wage jobs, and strengthens entire communities. After declining for over a decade, the manufacturing sector has rebounded – led by President Obama’s rescue of the auto industry– and created half a million manufacturing jobs over the past 30 months. To build on this recovery, President Obama set a goal to create 1 million new manufacturing jobs by the end of 2016 and is working to double American exports over the next five years by promoting U.S. goods and removing trade barriers, expanding access to credit, and promoting strong growth.” (3)
So, first Obama highlights that manufacturing sparks innovation, and strengthens communities. One can ask the question if manufacturing really sparks innovation and strengthens the economy, or if it is the other way around that innovations create more manufacturing, and in that way strengthen the economy. My view is more in favor of the latter. So I think, in order for the American economy to get back on track, one must create jobs in innovative industries, so that you can create more jobs through increased manufacturing, and not simply believe that manufacturing sparks innovation.
Obama also highlights that he wants to double American exports by promoting U.S. goods. The reason for the steady decline in American exports over the last few decades can be partly be explained by two important factors; the change in the composition of world trade, and the fall in productivity (GDP) (2). In order for the American export to once again find a firm foothold, and compete with other leading manufacturing countries worldwide, they should look to the fairly recent boom of innovative high-tech practices in areas such as Silicon Valley/San Francisco Bay Area, and leverage on the advantage of the innovative environment that has been created there (4). Innovation will lead to new ways of using capital and labor that will make the American workers more productive. Higher productivity (GDP) through innovation can therefore help the American economy and the American export levels back to competitive levels.
However, I find Obama’s policy proposal extremely optimistic, and if he, given that he gets re-elected, is able to double the U.S. exports over the next five years, he will have done an extremely good job. But given the amount of debt the American economy has accumulated with Obama in office, and the American economy’s current general state, I do not think Obama, or any other candidate for that matter, will be able to reach figures as stated in Obama’s proposal in only five years. As already stated, the American economy needs an evolution, but it will be ignorant to think that it will be a quick fix.
References:
1. Associated Press (2012), US national debt hits $16 trillion as Republicans blast Obama’s handling of economy, Retreived October 10, 2012 from: http://news.yahoo.com/us-national-debt-hits-16-trillion-republicans-blast-031301848.html
2. Federal Reserve Bank of New York (2012), What Falling Export Share Says about U.S. Export Competitiveness, Retrived October 10, 2012 from: http://libertystreeteconomics.newyorkfed.org/2012/05/what-falling-export-share-says-about-us-export-competitiveness.html
3. Barack Obama (2012), Issues, Retrieved October 10, 2012 from: http://www.barackobama.com/issues/
4. Tradeology (2012), The official blog of International Trade Assocation, Retreived October 10, 2012 from: http://blog.trade.gov/2012/07/24/supporting-innovation-and-exports-in-the-bay-area/
Show lessDeep analysis, thanks.
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Innovation is a two way process involving the generation of an idea and then converting the idea into a business to improve the quality of goods or services provided. Innovation thrives in a competitive environment and in turn, plays a key role in the achievement of such an environment. By virtue of its relationship with competitiveness,
Show lessinnovation is said to be at the heart of economic growth. One of the best examples to support this well established fact is of Innovation in the Indian IT industry and the resulting growth of the Indian economy. Innovation in Indian IT industry is a result of sense of competition promoted by a number of policy initiatives including liberalization of policies for computer and electronics sector. The innovation and the sense of competition results in creation of new jobs. More and more innovative minds take up these jobs and further contribute to the growth of economy. However, as aptly stated by Mr. Sam Pitroda “If India needs to grow at 9 or 10 per cent, then we have to innovate in all areas and it should not be left to engineers alone”. In order to achieve India needs to replace the age-old processes that are not valid anymore. It needs to create an environment to encourage investment in RnD and it needs to provide money to those who have ideas but no seed capital.
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Nowadays, innovation is such an important fact that must appear in all the candidatures for reaching any public office.
Moreover if the candidature is for being the new President of the USA, so that the President of the global economy leader. That is the case of Mitt Romney, the next candidate to the presidency of the USA versus the current President Barack Obama.
In the first point of Mitt Romney of his candidature that is about “Innovation and the economy” and he talks about innovation as the key to economic growth.
He has made a detailed economic plan about different topics for the improvement of the American economy, for instance: human capital, taxes regulation and trade. And the point that has really caught my attention is it trade.
I like that point because it talks about the defense of the intellectual property, which I think it is one of the most important things for innovation. If any entrepreneur is able to develop a great idea, people who will consume that idea have to pay for it because if not they will be stealing without paying property rights and attacking the purpose of innovation. If people steal to the others, people would stop having new ideas for innovate because they will not have any compensation.
I also agree with Romney in his aim of opening new markets and thereby creation of jobs for the Americans; I think it is a great initiative for prevent the unemployment in his country which is aimed to be the motor of the global economy.
Just for coming to a conclusion I would like to emphasize that i like the way this candidate wants an economic growth by the innovation and reaching the innovation through the effort and hard work of all Americans that together will create an efficient economic system leading to the most powerful economy all around the world.
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Through the programs of the two candidates for the U.S. election, two opposed conceptions of the role of the state in financing innovation are debated. Although the candidates are both conscious of the importance of innovation in the U.S. economy, their plans for financing innovation are opposed. Barack Obama wants the federal state to continue. He proposes to support the efforts of research and innovation to encourage the influx of capitals in several strategic sectors. Besides, he also wants to improve education in the United States.
Otherwise, the program of the Republican candidate is based on entrepreneurship. To Mitt Romney the only driver of innovation in United States is free-enterprise. He wants to set up a tax incentive policy towards investors and requires a simplification of regulatory procedures. Moreover he desires to limit the powers of government and intends to minimize the state’s interventions in U.S. federal policy innovation. The main foundation of his program is the human aspect: M. Romney considers that the human factor is essential for improvement. Therefore he proposed a reform of the immigration procedures to facilitate the granting of visas for foreign workers highly qualified. He also proposes to allow a permanent resident status to economics students who got the U.S. certificate. This way, the United States could benefit from more young skilled workers in critical fields of the U.S. economy.
About the investment in research and development, even if research universities should be funded by the federal government, we must not forget the potential of private investors. Mitt Romney believes that private investors should not be replaced by the financing of certain innovative sectors by the State. According to the Republican candidate, the private sector is much more efficient that investments from the U.S. federal government. This is why free-enterprise must be from now on the locomotive of tomorrow’s innovation.
In my opinion, Mitt Romney’s conception on innovation policy could be promising. Indeed, the private sector often leads to better motivation among the employees. Workers are more responsive to financial results. However, this Republican plan leaves the social security on one side. I think that to push the economy forward we must motivate people’s initiative. For this end, it is beneficial to provide a boost for private entrepreneurs and the self-employed. Nevertheless, we must keep in mind a main worry, namely, the public health. A prosperous economy cannot be appreciated in the long term if it damages the health of the population.
To sum up, Mitt Romney suggests a clear break with the innovation policy pursued over the last five years by the President Obama. Remains to be seen what the U.S. parliament will do with these attractive proposals while the financial context and economics conditions are at their worst level.
Sources :
Show lessUS election: The key issues, disponible sur le site de la BBC, http://www.bbc.co.uk/news/world-us-canada-19648670
The Obama-Romney debate fact-check: Who told the biggest whoppers?, disponible sur le site THE WEEK, 4 octobre 2012,http://theweek.com/article/index/234298/the-obama-romney-debate-fact-check-who-told-the-biggest-whoppers
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In Mexico, from where I am, in the short term there is going to be a presidential change, and the elected president Enrique Peña Nieto said in a recent public meeting, that has the intention to increase the funds to Science, Technology and Innovation.
As he said, nowadays public investment in these fields represent only 0.4% of GDP, and his desire is to increase to 1% at a growing rate of 0.1% each year (in Mexico, presidential period last 6 years).
In my opinion this policy It is a good initiative for having the means to increase levels of innovation in the country, or at least to encourage the interest of the people, as there is currently a central agency in charge for this aim, the National Council of Science and Technology (CONACYT), which creates programs to encourage people to study master or doctoral degrees, or conducting research projects, but in my opinion, one factor that has direct influence on this, is the level of education in the country.
I think the institute currently has good programs, just that people are not interested in doing a PhD, or a research project because they have first to solve other type of issues.
But going back to the article published about the intention of the President, to increase investment in this area, is that unfortunately in my country there is a high level of corruption, according to the Corruption Perception Index, Mexico from 2002 to 2010 obtained scores from 3.1 to 3.6 on a scale of 0 to 10 (Transparency International), where 10 means least corrupt. This high level prevents all resources devoted to innovation really reach their final destination.
Nevertheless, I think it is a good initiative, but also it still need the validation of the Congress to become a reality.
http://www.elpinerodelacuenca.com.mx/epc/index.php/politica/47547-ofrece-pena-nieto-mas-inversion-publica-en-ciencia-tecnologia-e-innovacion
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My response is also related to the Program proposed by the European Commission published on october 6th 2010 (communication on innovation union). I refer to the 5th key initiative over Enhancing access to finance for innovative companies and more specifically point 10 : “put in place financial instruments to attract a major increase in private finance”
I would express my opinion by taking an exemple:
Talking innovation Silicon valley can be taken as an modern reference. Nevertheless it is not perfection and it is useless to try to reproduce it perfectly. By analysing the successpoints of this erea -or phenomenon- the two most interesting advantages turn to be a wide academic environnement and an easy access to funding.
Focussing on the second point, most of the (embellished) success stories about Silicon valley start with young entrepreneurs with ideas that could get funded in order to launch their product and succeed in their entreprises. Those young entrepreneurs don’t have to convince their audience that they will succeed despite of the facts that they are young and inexperienced and that there are also a lot of risks. Investors are aware of it. In fact it is precisely the reason they are there.
This exemple illustrates a fundamental principle of innovation, the fact that two key actors play major roles: inventors with ideas and investors with a taste for innovation. None of them could go without the other.
Another exemple about this crucial relation is crowdfunding or kickstarter (www.kickstarter.com/) more specifically for innovation. The purpose of this platform is to enable investors to meet inventors and vice versa.
By the key initiative mentionned the EU tends to enhance financial support for startups and SME’s. By “putting in place financial instruments to attract a major increase in private finance” the Commission focusses on startups, fast growing firms, innovation project, … But at the same time the Commission focusses on “the European Investment Bank Group, national financial intermediaries and private investors”. This is globally the second key actor needed for innovation. Taking those two groups, “the proposals will ensure a high leverage effect, efficient management and simple access for businesses”, or enhence relations between each other.
My opinion is that among all the action points of the EU’s key initiatives, this is the most interresting one. Some might be more important as for exemple point 11:
Show less“By 2012, the Commission will ensure that Venture Capital funds established in any Member State can function and invest freely in the EU (if necessary by adopting a new legislative regime). It will endeavour to eliminate any tax treatment unfavourable to cross-border activities”
Europe can not promote innovation globally accross the continent if Venture Capital funds can not move freely accross member states. But this is a sine qua non condition rather easely achievable and measurable.
Point 10 is spotting one of the most crucial parameter for inovation, the relation between inventors and investors, and by this program the Commission will improve it. The improvement is a long term policy rather than a short term achivable goal.
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The presidential race in the United States has been marked by a broadening divergence in policy making between the two major presidential candidates: Incumbent President Barak Obama, a Democrat and Governor Mitt Romney, a Republican. However, in a recent debate (http://www.sciencedebate.org/debate12/) both have expressed the importance of innovation as part of economic growth.
The debate has focused on the macroeconomic level and the importance of privately funded Research and Development (R&D) and publicly funded scientific research. In specific, Republicans have been very critical of the spending of more than $90 Billion in clean energy and the intervention of the government in R&D. However, to Obama, such spending will generate more that $150 billion in clean energy projects (http://www.sciencedebate.org/debate12/).
In a globalized world, more and more, competitive nations are pushing the technology frontier as they “tend to have R&D intensities” (Griffith, 2004)-while making profits. As such, it is imperative for the United States to continue with policies to promote innovation as other nations are in the process of catching-up. In this line, there is no doubt that public funded scientific research has been and should be an important contributor to innovation, although it has been argued that more than 50% of R&D comes from the private sector (Uppenberg 2009).
Republicans have demonized public investments as a policy failure. The special case of failure is –they say- the solar panel company: Solyndra. Solyndra has been selling solar panels as an initiative to promote the use of alternative energies. With certain success, Solyndra got big contracts with industries that were looking to work with cleaner energy. However, this success was ephemeral. Last year Solyndra filed for Chapter 11 of the U.S. Brankupcy Code (http://www.solyndra.com/2011/09/solyndra-suspends-operations-to-evaluate-reorganization-options/). But this means that publicly funded R&D is a failure? No. Where there has been sporadic failure, big gains have been achieved. As such, Solyndra’s contribution to the market of solar panels has been underestimated. Solyndra has contributed to the innovation of other similar firms in the technological frontier by an entry-exit competition (Aghion, 2005). There are also many learning’s from Solyndra’s failure. Some new ventures, like Solyndra, lack access to funds to sustain their R&D as they cannot compete with big firms. Also, firms lack a framework of policies that promote competition – which in turn would disable monopolistic firms from defeating entry ones.
A policy framework that ensures competition should be in place to promote growth. Likewise, government should continue with its different incentives to foster innovation such as subsidies, tax cuts or financing R&D.
Where Solyndra failed, many more can succeed.
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Both candidates running for the presidency of the US are well-aware of the impact of innovation on future economic growth of the country, and both of them constitued a tight agenda in order to nurture it and be the most innovative nation once again. Of course their ideas and priorities diverge.
(Market) Regulation policies can evidently spur innovation, and among those, the REINS (Regulation from the Executive In Need of Scrutiny) act comes off as a strongly contraversial policy. Romney props it up while the Obama administration is against it. The REINS act simply stipulates that the Chamber of Congress could have a say in every “major” decision concerning the economy, but not only. In other words: any economic decision based on scientific expertise could find itself rejected by the Congress for political reasons.
We know that incentives to innovate might come from the fact that competition in a certain market is sustained. According to Schumpeter (and our first Problem Set!), a monopoly which has high levels of internal funds has the ability to invest in its R&D, but in order to do so it is necessary for it to feel threatened by other firms entering the market (a monopoly doesn’t want to get toppled). Eventually, according to Schumpeter, the monopoly will get dethrowned in the long-term by an other firm which has done a technological breakthrough, this is called the process of creative destruction and would explain why innovation spurs growth. I strongly believe that implementing the REINS act would give too much power to people in the Congress (who obviously lack expertise) in the ability to influence markets, and therefore hinder competition aswell as innovation. I stand by this opinion because of the (known) fact that lobbies in the US of America are strong, and through “revolving doors”, good market decisions could be prevented. I would support Obama on this policy, and reject it, while increasing incentives for entrepreneurs to set up start-ups, which not only will raise competition, but lower the unemployment rate aswell.
E.G.
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As we have seen during the previous recession, manufacturing is one of the sectors helping to lead the recovery. And as everyone knows, manufacturing is driven by the innovation and technological advance.
Refering to US President’s speech on March 9, 2012 in Petersburg (Virginia), innovation is essential in order tu support the economy growth and to get rid of the financial crisis that started a few years ago. By investing $45 million in a program called « Advanced Manufacturing Partnership » dedicated to encourage innovation through a stronger collaboration between government and industry, Barack Obama’s message was very clear : he wants « the most advanced engineering schools to collaborate on new ideas, new technology, new methods, new processes ».
I am deeply convinced the President Obama in on the right way by betting on young talent to revitalize the economy. To illustrate my point, let’s remind one of the quotes of the founder of the current biggest company in the world : « Innovation has nothing to do with how many R&D dollars you have. It’s not about money. It’s about the people you have, how you’re led, and how much you get it ». By collaboring with the US best engineering school, it seems those two prominent men were, once again, on the same wavelength.
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The « Green Tech » policy proposed by the president Barack Obama since his arrival in the White House reflects both how innovation in the field of energy is necessary for « moving forward » on economy (which is of course an issue of today’s generation) and how the beneficial effects of a long run decision are difficult to proove the day before the elections.
Clean energy is an important topic of Barack Obama’s campaign. The aim of this policy is to allow the USA to have more control on its own energy (by developing American-made energy and by increasing the efficiency of those existant) and therefore to reduce the reliance on countries which produce petrol. We know that the future based on this relations is compromised because of the limited available ressources, the instability of political climate overthere and the associated increasing price. Growth in USA couldn’t occur (or with difficulty) in this conditions, energy is the fundation of today’s economy !
In response to his, huge investments have been made by the government in firms belonging to the energy sector in USA to develop fuel technologies and advanced vehicles. Moreover this policy tends to increase the employment (which is a factor of economic growth in a country). But as we saw during the Economics of Innovation’s lecture last week, investments in R&D are risky and not easily assessable…
Actual results of « Green Tech » policy are not very positif : lot of firms which have been helped by the governement went bankrupt and less new jobs than predicted were created. It’s a good opportunity for criticisms. But there isn’t any immediate solution to put the economy back on its feet after the crisis in 2008 on a sustainable way. Time is recquired to see the benefit of a such policy but adopting a long run vision is difficult when there is one month left before the elections !
My Sources :
-http://www.sciencedebate.org/debate12/
Show less-http://www.usinenouvelle.com/article/obama-et-les-green-tech-un-bilan-en-demi-teinte.N182018
-http://latimesblogs.latimes.com/money_co/2008/08/obama-energy-pl.html
-http://www.whitehouse.gov/energy/securing-american-energy
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I would like to give my opinion about one of the measures proposed by the Republican presidential candidate, Mitt Romney.
According to his answers about measures that can improve innovation (see: http://www.sciencedebate.org/debate12/), M. Romney wants to sustain the human capital flight (or brain drain) in the favor of the United States which is already the case. Indeed it’s a phenomenon where some of the best seachers and scientists of a certain country (often developing countries) emigrate to other countries where they can work in better shape (work and living conditions, earnings). By offering better conditions such as legal visa or permanent residence for the best foreign searchers or students, the USA would attract foreing searchers easier and they would maintain their economy at the top while also renewing their innovation potential.
That would be a huge boost to the US human capital but it can also create a more enormous gap between them and other countries who are trying to develop. Indeed, it’s hard for people out of developping countries to resist the appeal of the USA. Even the conditions in Europe are not as good as those offered in North America for research (according to Wikipédia, 40% of the most influencial French economists were expatriated in USA).
Furthermore, M. Romney wants to close off the American access to Chinese markets, fearing that China steals the intellectual property of American innovators. I think it’s a little regrettable because the Americans could also have learn something by working in Chinese markets even though the priority here is to protect their own intellectual property. And I also think is a little hypocritical to speak about other countries stealing their intellectual property since the USA are the country with the most emigrants seachers, including Chineses (only one fourth of the Chineses who went abroad to study or to teach came back to China).
My global opinion stands as follow. On an American point of view, it’s a great measure to maintain their position at the top of innovation and according to the importance of innovation, to contribute to their economy growth while unforcing their main competitors. In this electoral context, it’s of course what M. Romney is going for in order to convince the Americans. For the best foreign innovators, seachers and students, it’s also a huge opportuny to beneficiate those working conditions which wouldn’t be available if they stay in their native country .It can help them to develop their personnal knowledge.
But on a worldwide standpoint, isn’t it disturbing to see some countries (which represents a little amount of the world’s population) taking advantage of the knowledge while the developping countries don’t have a chance to retain their best seachers and therefore can’t develop themselves? Even us, Europeans, aren’t unaffected by the human capital flight. The gap between the biggest economical leaders and the others will continuosly increase.
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The policy measure which I would like to discuss is the need to create a new innovation indicator. This is for me essential. Indeed, to be able to estimate and compare the level of innovation in our country, we must have a reference which show us if we are on the good way. The measurement of the level of innovation in every compagnies will show us on what we must put the priority.
The most important point for me is that this indicator will be implemented in all Europe. The more people will use this indicator the more it will be easy to compare firms and countries in terms of innovation. We have seen with the crisis in Europe that some countries don’t have the same fit across Europe. The most famous example is the gap between Greece and Germany. An European indicator can objectivize this fit on an innovation point of view. This can lead to exchange of ideas between the “good” and the “bad” actors, and so increase the level of innovation in whole Europe. Indeed, we’ve seen that our future is linked; if the Europe is weak and divided, then it’s all of the European countries which suffer. That’s why we have to share our ideas and benchmark our result.
The benchmarking of the firms in Europe can tell us a lot about our economy, and with several kind of benchmarks we can see in which sector we have a lack of innovation and then put the effort on. For instance, some countries can be specialists in a specific domain and weak in an other one. So the benchmark between firms and sectors can also tell us something about the big measures which have to be decided.
The indicator will offer the oportunity to the politcs to take decisions being better informed than before, but it is clear that in the end the decisions won’t be the same in every country, depending on the governments and the specificity of each country. However, it will maybe be a good thing that the European government gives some advice to country to lead the entire Europe in a more or less same way.
The difficulty, for me, is to create such an indicator. Indeed, I think that with the big part of any indicators, there is sometimes a wrong reflect of the reallity. The GDP for instance, can’t define on is own the wellness of an economy. So, this new indicator have to be as close as possible of the real level of innovation.
To conclude, this is one of the first thing to do for me, create a new innovation indicator. To be able to measure and decide in an optimal way.
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Referring to Mitt Romney’s policies for remaining the USA as a leader in innovation, Human Capital has caught my attention. The candidate defends the intention of attrackting and retaining the best trained and brightest students and workers from abroad. To achieve this goal he will raise visa caps for these desired foreigns and will give facilities and permanent residence to students with high degrees.
I will like to give my opinion to this policy. The USA has a ver strict immigration policy. It is not easy for a foreign to obtain a permanent residence permit. I think that with the actual policies many potential workers and students are being lost by the USA and with them new companies, ideas and consequently innovation. I totally agree with Romney´s policy that will give the opportunity for many bright students to finish their studies in the USA and then probably work there providing innovation and growth to the country.
The USA is a very attracting country for young people with high expectations so the best thing this country can do to continue innovating is facilitate the entrance and permanence of them. To improve this policy i think that it is also important to mention scholarships. America has invest a lot of money in sholarships for high performance students athletes, but in my opinion a part of that money would have to be used to finance the studies and residence of those with high marks in mathematics, ciences and engineering.
In conclusion, Romney’s policy is the first step for developing a policy that will make the USA the home of the most promising students.
Show lessHere is my critical view on this: this policy is likely to increase the “brain drain” for other countries (i.e., bright students or graduates leaving their country of origin and not returning); is it fair to foster US economic growth at the expense of other countries’ growth?
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For many years the U.S economy was the largest, most productive and most competitive economy in the world. However since the 21th century, some concerns were raised about its ability to remain in this preeminent position, indeed other economies (mainly in Asia) started to catch up with the U.S economy, in terms of education for instance.
Nowadays, in the context of global economic slowdown and financial crisis, these concerns are even more profound and according to a study about the Competitiveness and Innovative Capacity of the United States “innovation appears more and more as the key driver of competitiveness, wage and job growth, and long-term economic growth”. Innovation is seen as the way out of the crisis.
In his Plan for Jobs and Economic Growth, Governor Romney proposes a 5% cut in non-defense Research and Development from the fiscal year (FY) 2012 level. Governor Romney’s position about innovation is contradictory: he highlights the key role of innovation in job creation and economic growth but at the same time, he plans to reduce the federal investment in non-defense R&D. In many ways, this measure does not seem to be the solution to foster innovation:
• R&D is one of the factors affecting economic growth, indeed, R&D plays an important effect on productivity increase and it seems that the U.S may be under-investing in particular types of R&D in the civilian sector of the economy that present high estimated marginal rates of return from R&D. (Mansfield E. 1972. Contribution of R&D to economic growth in the United States. Science 175: 477–486)
• In a report conducted by ITIF ( The Information and Technology Foundation) “Comparing the 2012 Presidential Candidates’ Technology and Innovation Policies”, the authors show that in the period 1995-2008, due to a slowdown in federal R&D investment, the US have known a substantially slower growth rate in terms of R&D intensity that other countries. Knowing this fact, Mitt Romney’s measure seems to address even less the current needs.
• Nowadays, one of the most problematic sector in the U.S is the manufacturing sector, it stills remain a vital part of the U.S economy even thought it has been hit hard by fierce competitions, mainly from Asia. For this sector to remain competitive, the U.S need to try to put in place better technology and that goes in pair with an easier access to federal R&D funding.
It must be said that innovation is a long process; it involves a first stage of large losses, and of course in the current context of economic slowdown, some governments choose to cut their investment in R&D in order to focus on short term issues.
In conclusion, creating an environment suitable for innovation should be combined with creating incentives for innovative companies to remain in the U.S and to base there a large part of their designing, manufacturing, operating … processes.
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With reference to the Innovation Strategy fronted by Barack Obama in 2009 (now updated for the 2012 electoral campaign), I would like to comment on one of the building-block actions set in order to spur economic growth and innovation in the USA.
The policy measure I would like to comment in this manner, is the one that encompasses physical infrastructure, more specifically how Obama aims to build a leading 21st century physical infrastructure in the USA. (See: http://www.whitehouse.gov/innovation/strategy/appendix-a)
In brief, Obama seeks to achieve this by:
1. Investing in high speed rail-projects across the USA, with the ultimate goal of connecting 80% of Americans to the high-speed rail systems within 25 years.
(He proposed to spend $56bn in January 2011. So far, $10bn has been approved.)
see: http://topics.nytimes.com/top/reference/timestopics/subjects/h/high_speed_rail_projects/index.html
2. Increase the efficiency of air traffic control. This will be done by increasing the funding for the NextGen program, an ongoing transformation of the National Airspace System.
see: http://www.faa.gov/nextgen/why_nextgen_matters/
3. Establishing a National Infrastructure Investment Bank, with the main function of leveraging investments in infrastructure projects with the highest national priority. This bank will be open to private, state and local dollars to complete projects more efficiently.
see: http://www.washingtonpost.com/business/economy/how-obamas-plan-for-infrastructure-bank-would-work/2011/09/19/gIQAfDgUgK_story.html
Historically, infrastructure has played a crucial role in increasing economic growth and innovation worldwide. However, there are still several reasons for why I believe infrastructure itself can be a catalyst for innovation also in the future.
Firstly, commerce is made even more efficient. A quicker, safer and cheaper (in the means of marginal costs) way of transporting people and goods will benefit both businesses and consumers. For consumers, this will give them higher utility in the way that they now can search for an increased amount of products or services for the same price, or save time and money by sticking to their prior option. For businesses, reduced time and costs of transportation may increase their sales territory. For some firms, this may actually open up for export possibilities, making it possible to sell in new markets. For potential start-up companies, a bigger customer reach may be exactly what is needed to become a profitable establishment.
Secondly, big investments in up-to-the-minute infrastructure will drive innovation by creating jobs that revolves around green and sustainable communications systems, such as high-speed rails, renewable energy, smart grids etc.
There are also several micro-economic aspects by investing in sustainable infrastructure which I believe will provide a solid basis for innovation. For instance better railroads may reduce the amount of cars commuting in and out of the cities. This will in turn reduce the amount of traffic jams during rush hour, which creates a huge societal cost (i.e. the inefficiency of waiting – (1) no production of goods and services and (2) less utility for passengers by waiting in traffic jams). I believe the same reasoning can be applied to delays in the air traffic as well, something which the NextGen-project seeks to minimize. This inefficiency on the roads alone is calculated to cost American commuters $100 billion each year, so it is definitely not to be ignored.
(See: http://www.americanprogress.org/issues/economy/report/2012/09/05/36409/creating-a-national-infrastructure-bank-and-infrastructure-planning-council/).
Another valid point is that fewer cars on the roads and less traffic jams in turn will reduce air pollution in the cities and all the negative externalities deriving from this. (Health issues, EHS-actions, extra fuel costs etc.). Fewer cars on the roads may also reduce traffic collisions and traffic deaths. These latter effects are very hard to measure and are for that reason often left out of the equation when calculating future profits of infrastructure investments. Another interesting question is: What is really the lifespan of a state of the art, high-speed railroad? Some of the tracks built in the late 1800s are still in use today, and with recent technology and proper maintenance, for sure the returns on investments from high-speed rail projects may be greatly underestimated.
For the USA, which now rank as number 24 when it comes to having the best infrastructure in the world (2012-list made by World Economic Forum) (See: http://business.time.com/2012/06/15/failing-u-s-transportation-infrastructure/), improved infrastructure is a key priority in order to attract companies and raise the economy. California has already approved a $98 billion dollar project due 2033 to create the first regional express bullet train in the USA. This will cut the trip from Los Angeles to San Francisco to 2 hours and 38 minutes instead of a 6 hours drive, and at the same time, the project is expected to create 100.000 jobs. With an increased funding on state level, and establishing a national infrastructure investment bank to reduce the bureaucracy and administrative costs in financing, I am sure more of these innovative high-speed rails projects will come to surface in the near future as well.
Of course, investing in infrastructure comes with a price. Huge infrastructure investments cost an enormous amount of money, and for a country with $16 trillion in public debt, it may seem irrational to spend tens of billions of dollars on high speed rail investments now. However, in the long run, I believe a well-functioning infrastructure is essential for attracting innovative companies to the USA. By saying that the USA should build a leading 21st century infrastructure, Obama is shooting for the moon, but I believe his policy measures are on the right track to at least get a little bit closer. And by investing in infrastructure projects based on demand and population growth (which the National Infrastructure Investment Bank seeks to do), and not by political lobbyism, I believe the investments will pay off in the long run. Not 10 years from now, perhaps not even 20, but in 30 years or more. By not investing now, their infrastructure will deteriorate even further, making it even less attractive for innovative companies to establish. So to turn the criticism upside down, can the USA afford not to?
Show lessGood analysis (just try to be a bit shorter next time).
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I opted for Barack Obama’s Innovation Strategy (http://www.whitehouse.gov/innovation/strategy/executive-summary).
Nowadays, we are in the situation where the markets are under pressure, saturated and the competitiveness is tough. The only way to distinguish ourselves from others countries is to innovate and improve the quality of our equipments, our products and services. In other words, innovation is the solution to stay competitive and to face the crisis.
My attention has been drawn to three points in particular which are the most relevant to me.
In his strategy, Obama talks about clean energy technologies. By investing in such technologies, we could create more jobs and by this way increase the economy’s growth. Furthermore, it respects the environment which is an important subject in our modern society. In my view, it is the key solution because the resources get exhausted and the clean energies are the best alternatives.
A priority of Obama’s Innovation Strategy is to create a favourable environment for innovation for the US business in order to promote the entrepreneurship. I think this is an important point because firms need a healthy environment to be able to innovate and create. Moreover if our competitors invest in innovation, it forces us to also innovate otherwise we will be excluded of the market.
About the education, we must educate young people by encouraging them to think different. People have to be unique and original to succeed in innovation. If we want to create new ideas, we need to be different.
Obama focuses on high school level. But in my opinion we should involve innovation from a very early age.
In my point of view, the innovation must occur in all levels of the society involving students, companies and also the government. This is probably the only way to have a real impact on the economy.
In conclusion, my vision of innovation is quite human oriented. I think that behind innovation there are people who create and this is where the government should invest in. By innovating, we increase the exchanges of the economy and we increase the economic growth.
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I very much enjoyed reading your blog post Professor, yet I feel there is an elephant in the room that must be approached before diving in to the complexity of innovation in the world of politics. Innovation is by its very nature a fragile concept. It is used fast and loose as if to represent a metaphysical growth factor that inexplicably boosts the economy. In other words it is viewed as ‘the more money you spit in the more innovation you get’. When Presidential Candidate Mitt Romney for example says: “three-quarters of the U.S. productivity advantage over other OECD nations is directly attributable to innovation…”, what exactly is he referring to? If it is simply all technological advances then I suggest that the projection of the innovation discourse has to be altered.
Setting the stage
Up till the 1990s the discussion on regulation vs. innovation was focused around the need for innovation or the need for welfare. Increasing regulation would (back then) surely mean less optimization thus less money for R&D and ultimately less innovation. The counter-argument for this chain of events being that regulation is needed to ensure the welfare of citizens. In 1995 Michael Porter presented the Porter Hypothesis (Porter:1995) which hypothesized that regulation can lead to more innovations. A good example of this is Vestas the Danish windmill producer, Velux the Danish window producer or Danfoss the Danish filtering producer, all respectively at the top of their industries. A lot of Danish examples I admit, which only underlines my point as Denmark has one of the most regulated private markets in the Western society.
The Presidential Candidates
“Once we rid ourselves of traditional thinking we can get on with creating the future.” – James Bertrand
The above quote does quite well to encapsulate the exact opposing polls of the American president-elects. On the one side we have President Barack Obama arguing a very future oriented discourse emphasizing the new America and what can be achieved by creating a new economy. On the other side we have Mitt Romney arguing past and present statistics that emphasize the importance of innovation for the current state of affairs.
The Policy
In The Information Technology and Innovation Foundation’s (ITIF) article: “Comparing the 2012 Presidential Candidates’ Technology and Innovation Policies” a certain comparison awoke an interest in me, under the comparative point called: “General Approach to Energy Policy”, Obama’s approach is presented like such: “Promote a national energy strategy that significantly supports the transition from fossil fuels to clean energy sources…”. Mitt Romney’s is presented as follows: “Develop a national energy strategy that increases domestic energy production and achieves “North American” energy independence by 2020, primarily through significantly expanded fossil fuel extraction and production in areas including those supported by President Obama as well as the Arctic National Wildlife Refuge and the Pacific coast…”
Renewable energy is arguably one of the biggest innovative ventures of the world yet its substitutes (fossil fuels) are so enveloped in financial and political incentives that regulative structures are needed to break the frame of ‘traditional thinking’. I admire Mitt Romney for trusting the American market to reach a sudden realization by itself though I do not see it as very likely. This current problem is exactly where Porters Hypothesis can be a beneficial new addition to the discourse of innovation. I do not offer any solutions in what I have just presented, purely a reconsideration of how we view the next steps that need to be taken in order to ‘let our innovations run wild’.
Sources:
Show lessITIF Article: http://www2.itif.org/2012-obama-romney-comparison.pdf
The Porter Hypothesis: http://www.jstor.org/discover/10.2307/2138392?uid=3737592&uid=2&uid=4&sid=21101299108427
I also very much enjoyed reading your comment!
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As asked the first assignment, I chose to give my opinion on the program of the U.S. presidential candidate, Mitt Romney (website: http://www.sciencedebate.org/debate12/). The point of the program on which I will focus is the promotion of a better education in the United States.
In my opinion, this point is quite relevant because it seems that education is a key area for a “healthy” nation. Better education leads to improvements in both social and economic area.
There seems to be a link between better educated population and the propensity to innovate. Indeed, a better access to education could increase the number of qualified inventors. However, in the United States, the registration fees are astronomical and higher education is out of reach for a portion of the population. In addition, some people are forced to choose universities where the education level is not as high as those to which they could apply if they had more money.
Mitt Romney suggests drawing from federal taxes to provide financial assistance to students. I think this is a very good resolution but are there really enough government financial resources to give to a large number of people, access to education? Moreover, wouldn’t it be better to encourage students to be interested in the field of innovation? Indeed, if they choose to study literature or other fields unrelated to innovation, is an economic growth through an increase of innovation still possible?
Furthermore, this measure seems closely related to the point “Human Capital” of Mitt Romney’s program. The only difference is that it is aimed at the student / foreign workers. It is interesting to try to take advantage of globalization. Indeed, it seems more effective to think of growth through innovation from an international point of view.
Exchanging ideas between different innovators could be an advantage but on the other hand, it could also be a disadvantage. We can illustrate this by the example of China, which continues to create counterfeit and copy U.S. technology. Thus, as the United-States opens its education to foreign students it would be beneficial to find a way (other than the offering of a permanent residence) to “keep” its foreign graduates.
To sum up, I would say that I find the policy proposed by Mitt Romney quite interesting. It could permit a growth for the country in terms of innovation, but also from a social point of view. However, I find that the candidate should also take an interest in new energies (see the program of candidate Obama: http://www.whitehouse.gov/assets/documents/SEPT_20__Innovation_Whitepaper_FINAL.pdf) because it seems to me that this area is promising. There are many things undone that would be an advantage in terms of the environment and that would induce economic improvements.
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I would like to base my point of view on one of one of the two presidential candidates: Mitt Romney. My answer is based on the articles: http://www.nature.com/news/obama-and-romney-tackle-14-top-science-questions-1.11355 ; http://www.sciencedebate.org/debate12/ ; and http://www.mittromney.com/issues/education.
Both candidates propose a lot of measures mainly focused on innovation: such as innovation and economy; climate change; Research and the future; Education; etc…
According to me, one of the most important points that M. Romney suggested is the policy on what he called the “human capital”, which is a part of his detailed economic plan.
In his plan, he explained that the US have to be reformed on the immigration in order to keep the knowledge, “the best and the brightest”. According to him, “(…) Equip more Americans with the skills to succeed. I will raise visa caps for highly skilled foreign workers, offer permanent residence to foreign students graduating with advanced degrees in relevant fields, and restructure government retraining programs to empower individual workers and welcome private sector participation”.
From my point of view, I think that Mitt Romney wants to focus the America’s Human capital on knowledge and skills; which is according to me a good idea and is directly linked to the education’s part. On the contrary, I think that the US have to be focused on their own workers rather than on foreign workers by improving their skills.
I can’t agree more with my colleague Marta Ripamonti that the education is a strong way to develop a nation. Unfortunately, the education’s part remains a big challenge for the US. Indeed, even if the economy is based on science, technology,… the US students are ranked between the 23rd and the 31 rd. (respectively for science and maths). Despite a lot of governmental spending, the situation remains the same.
Mitt Romney’s solution for K-12 education is based on:
– Promoting choice and innovation: in order to give the possibility to students to choose their own way, with more options and possibilities;…
– Ensuring high Standards and Responsibility for Results: in order to ensure that they will be well-prepared for High School or for working life.
– Recruiting and Rewarding Great Teachers: with policies of recruitment, evaluation and compensation.
To conclude my answer, I would say that spending money on education is one of the most important things to do in the US in order to increase student’s skills and possibilities, which would lead to higher ranks for US students. But the money has to be invested intelligently. The aim of this spending is to offer a large range of studies’ choices. Students can thus choose what they want to do as studies and after. So they more easily will find a job which will be, at the end, a return on the initial investment and thus “avoid” loss of money for the US economy. We could see it as a “cycle”. The government spends money to create choices for students and those students/future workers will bring back some money.
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With regard to Innovation Union – A Europe 2020 Initiative (see: http://ec.europa.eu/research/innovation-union/index_en.cfm?pg=action-points) I would like to evaluate the aim of Promoting Excellence in Education and Skills Development. The main target of this action point is having at least 40% of 30-34 years old people third level educated.
I agree with importance of education in terms of boosting human capital, which is a significant part of the Solow residual (see: Theodore Schultz, Investment in Human Capital, The American Economic Review, March 1961) and one of the main drivers of economic growth.
I am convinced that the quality of education is at least of the same importance than the quantity of educated people in the society, therefore the quality is the objective requiring many improvements. According to QS Top University rankings 2012 (see: http://www.topuniversities.com/university-rankings/world-university-rankings) there are only 5 universities from the EU in the top 25 (all of them from UK) and according to ARWU rankings 2012 (see: http://www.shanghairanking.com/ARWU2012.html) there are only 4 universities in the top 25 (all of them from UK as well).
A group of Australian economists tried to find out main socioeconomic factors that stand behind success of US universities (see: Li, Shankhar and Tang, School of Economics Discussion Paper No. 391, June 2009, The University of Queensland). Using econometric methods, they discovered a significant importance of population, R&D expenditures and English like a predominant language (general united language).
In my opinion, the best way how to increase quality of universities in the EU is to establish a single market of education in the EU. The EU population overcomes the USA, so the EU single market is larger in size and with high R&D expenditures as well. If more English study programs were available on local universities and higher cooperation supported between academic institutions (joint research projects etc.), universities in the EU would become better and higher ranked and more competitive in comparison to universities in the USA and even catch up with them.
With universities of higher quality in the EU, less people would go study out of the EU area and more talented people would be incoming to the EU education system like a students or researchers.
Show lessI hope that this class, ‘Economics of Innovation’, taught in English, goes in the direction of your proposal 😉
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Two years ago the European Commission drew up a list of thirty initiatives intented to boost innovation in the European Union. Among those actions plans, one is aimed at fostering innovation by improving access to finance for innovative companies. I would like to give my opinion about the implementation by the European Union of financial instruments to increase private finance.
First of all, according to José Manuel Barroso in his presentation to the European Council in February 2011, the difficult access to finance is one of the main problems the European Union has to deal with on the subject of innovation. Furthermore those issues are getting worse because of the financial crisis.
Therefore, for the period 2014-2020, the Commission has proposed to organise financial instruments such as the European Investment Bank Group in order to help companies in getting funds for research and innovation. The European Union budget should also help in financing firms with growth potential. The financial instruments vary according to the sector, how developed is the company – is it a start-up or a more established company? – the kind of innovation, etc. More details about those proposals can be found here : http://i3s.ec.europa.eu/commitment/14.html and http://i3s.ec.europa.eu/commitment/15.html .
In my opinion, improving the availability of funds for firms with innovative projects and growth potential is crucial. Indeed, what is the point of investing in education if companies are not financially able to do research afterwards and make their innovative ideas come true? Many firms have to give up on their projects because of a lack of funds and a reluctance from the banks to lend to smaller companies. That situation has become worse as the financial crisis has made the banks even more risk-averse. If the European Union is willing to invest in reseach and innovation, a better availability of finance is then a key action. By extension it should have a positive impact on growth.
Moreover, it is recommended for the European Union to spend more on R&D – in better finance access for firms or in education, amongst others – if the Union is willing to spend 3% of GDP on R&D by 2020. Indeed, the current share is only 2%, which is smaller than the American and Japanese ones although the European expenditures on R&D in real terms are only behind the USA. However, always in real terms, China might catch up with the EU by 2014. Thus it is important for the EU to invest more on R&D if it wants to remain competitive.
In conclusion, it is primordial to make easier access to finance for firms as many of them have innovative ideas but are not able to afford their realisation. Furthermore those expenditures on R&D should help the European Union to restore growth and remain competitive.
Show lessI agree with you. On this topic, see Marlon Braun’s comment about crowdfuding.
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I would like to offer my views on “Spreading the benefits of innovation across the Union” (see: http://ec.europa.eu/research/innovation-union/index_en.cfm?pg=action-points ) which is one of the action points in the program proposed by the European Commission, called Communication on Innovation Union published on 6 October 2010. The reason why I chose this specific point was that this is one point which can be very strongly compared with India which is a developing country and has just started to focus on innovation while the European Union is much more ahead in terms of recoginizing innovation as a key to economic growth.
Show lessAs a student who has had a chance to explore and understand economic growth across different economies, I feel that it is of utmost importance to realize the benefits of innovation to motivate people to work in this direction. The structure in which the European Union decided to implement this action point and the thought process behind it is an excellent example for any country who is about to embark upon this path. The proposal for this action point came from the fact that the union despite allocating funds for innovation is not using them effectively. Comparing this with India the funds allocated are very small and effective utilization is even lesser. Another fact observed by the European Union was the difference in expenditure in innovation and ability to absorb it because of the ongoing financial crisis due to which the intensity of focus is different in different regions. Comparing this with India you have 28 states with different problems to put resources to and different mindsets and again the intensity and focus on innovation would not be the same due to which you observe varying levels of economic growth. The plan EU has, to address this is planning and implementing regional policies which is linked to trajectories laid down in the national reforms program. Again something which happens in India but is more focused on reducing social, territorial and economic disparities and not facilitating smart growth..
Thus the various steps laid down by the EU to implement the above objectives are infact just the next steps what India has to do. Thus I totally support the above action point which in true terms does spread the benefits and motivates all the members to drive growth using innovation. We in India first have to understand and experience the benefits to innovation to make and implement such kinds of policies. Thus I feel that we are exactly one step lower than the EU to make innovation work for us. Also we are just starting to realize the potential of innovation and the above article gives not just specific action action points but a very detailed perspective on how effectively synergise innovation to play a positive role in the economic development of a country or a region.
Interesting Indian-European comparison. Thanks!
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I would like to comment on the Innovation Union, initiated by the European Commission in 2010 to realize a vision of Europe in 2020 with “more jobs, improved lives and better society”.
One of the action points says “Focusing EU funding instruments on Innovation Union priorities”. The aim is to launch programs which focus on societal changes, streamline funding instruments, radically simplified access and to design EU research and innovation programs.
In my opinion it is very important for Europe to have transnational research and development programs in order to face the challenge of rising international competition. In fact today’s challenges are very complex and can be a threat for Europe’s competitive position on the global stage.
Time has changed and from the beginning of the EU as European Coal and Steel Community with a later focus on agriculture and infrastructure we have to adapt to modern time and support an Innovation Union. The European budget should focus on investments, which help to stimulate sustainable growth in order to remain internationally competitive.
At the same time, continued fragmentation and lack of coordination in Europe hamper cross-national investments and research exchanges.
The EU should launch and support projects, which are innovative and not just prestigious. The Galileo project as a global navigation satellite system indicates difficulties and shortcomings of these projects (http://en.wikipedia.org/wiki/Galileo_%28satellite_navigation%29). As a result of huge administrative burdens and the fact that the project has to be located within different countries, private funding was not available and time had to be prolonged so that as a consequence costs have doubled.
In my opinion European rivalries have to stop so that we can support the best projects and investments instead of competing nationally for EU funds.
We have to keep in mind that innovation and economic growth cannot be imposed by the government, as the development of East and West Germany indicates. Even after 23 years of transferring around 60-70€ billion per year from one part to another, the GDP (71% of western level) and productivity of economy (80% of western level) are not the same (http:// faz.net/aktuell/wirtschaft/wirtschaftsforscher-osten-nicht-laenger-subventionieren-11663011.html).
Show lessThis leads to my final conclusion, that research projects should have priority funding, but at the same time the investment has to fulfill certain criteria concerning effectiveness and sustainability.
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I will discuss the regional policy of the European Union, an investment policy aiming at supporting job creation, competitiveness, economic growth, improved quality of life and sustainable development. This policy goes to the same direction as the Europe 2020 strategy, while focusing on less developed countries and regions.
For the period 2007-2013, the cohesion policy has been working on 3 main targets:
1. Convergence – solidarity among regions
2. Regional Competitiveness and Employment
3. European territorial cooperation
(http://ec.europa.eu/regional_policy/how/index_en.cfm#2 for more details)
Walloon Region (except the Hainaut province) is concerned with the 2nd target, and has implemented an Operational Programme (http://europe.wallonie.be/?q=node/12) in order to reach the objective, while being co-financed by the European Regional Development Fund (ERDF). The total budget amounts around to 720 million Euros, with 12.5% of the investments made by the ERDF.
One the 4 priorities set in this programme is called: Priority 2-Development of human capital, knowledge, know-how and research. This priority is devoted to the development and exploitation of research and technological innovation potential, non-technological innovation and the development of successful skills training infrastructures.
It intends to implement 4 measures in order to do so:
1. Support for technological advances of SMEs, encouraging cooperation between research centers and high education schools.
2. Strengthening approved research centers and the services subsequently made available to enterprises in the area;
3. Support to non-technological innovation
4. Creating effective infrastructures for the dissemination of knowledge associated with new technologies to the active population and young people.
I think that including this priority in order to improve regional competitiveness of Wallonia is very important. That region is indeed lacking behind other regions regarding its innovation, and its R&D sector is quite poor. Hence encouraging ties between research, technological advances and SMEs needs and demand is a smart initiative. Usually, those small companies have less budget and less means or tools to make technological progress, while it is necessary to stay competitive. Besides, showing via a regional programme the attention and investment done in the region is essential to attract even more investors while restoring confidence that competitiveness and employment will improve in the future.
However, the measures are not explicitly linked together, and from what appears to happen when looking at the projects funded, (http://ec.europa.eu/regional_policy/projects/stories/search.cfm?LAN=en&PAY=BE&the=ALL&type=ALL®ion=ALL). There is only 1 or 2 measures implemented in one same project. For example, one will focus only on education and training, while another will focus on R&D in one company. The education centers have to be tied to the research centers in order to provide most useful knowledge and know-how to young people.
Besides, It is important not only to support technological advances by providing new material to the stat-of-the art for research centers, but also to make sure that the economy (and specially here the SMEs) benefits from it. Knowledge transfer is to my opinion a key driver to competitiveness and economic growth. Innovation has to be made in useful sectors, adapted to the regional economy.
Hence, I would only consider the Priority 2 to be successful if there is a synergy between the different actors involved in each specific measure, so that strong competition can be maintained, with an environment supporting technological advance via research centers, skilled people and education infrastructures adapted to the regional market needs in order to benefit from those investments and contribute to economic growth.
Show lessDeep and critical analysis. Good!
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I agree the proposition of Barack Obama about the education challenge. Indeed, I am persuaded that innovation is intimately linked to human resources quality. As innovation is a continuous and complex task, it needs to be regularly reinforced by highly skilled searchers. Nevertheless, I believe that this challenge will also need different soft skills. Not only math and science, but also economics and philosophy. Math and science mainly relate to technology. Economics and philosophy could develop an alternative way of innovate, consisting of rethink the use of existing technology.
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The main idea of the European Commission’s policy “Europe 2020 strategy” is that we should invest in research and innovation to make sure that we have a clear idea of the origin from products and services that might drive our economic growth.
In the article, the European Commission declares that we are facing two issues: an ageing population and a strong competitive pressure from globalization.
By this way it is very important to approve our capacity to create more jobs, to improve live conditions and build durable energy in order to meet the challenges of our society.
The “Innovation Union” is the solution to achieving these goals. The first thing that the Commission has decided to do is to invest 3% of EU GDP on research and development for industrial process and new services or products to create job and growth. This new investment should bring us to answer to the major issues of our society, such as economic growth, employment, climate change, the optimal use of energy and resources, public health and demographic changes.
According to the European Commission’s website: “The policies in the Innovation Union Plan aim to do three things:
• Make Europe into a world-class science performer;
• Revolutionize the way public and private sectors work together, notably through Innovation Partnerships;
• and remove bottlenecks – like expensive patenting, market fragmentation, slow standard setting and skill shortages – that currently prevent ideas getting quickly to market.”
From my point of view, it seems that boosting our innovation performance is the correct way for Europe to face competitive pressures, which come from globalization. One of the strength of Europe is the high level of education and so Europe should use it to develop innovative plans, like technical process, in order to create new jobs. This, in long-term, should push our economy.
Currently Europe has a good position on the word economy but we can observe that other countries, like South Korea and China, are catching up very fast. If we are just based on the current strategy of production, others countries that dispose more labor and also offer cheaper production cost will overtake us.
Thus, we can see that Europe can be in danger in the near future if it doesn’t innovate. Nowadays, Europe remains fragmented and insufficiently innovation-friendly. By the investment of 3% of EU GDP on research and development, the European Commission intends that the European market including publics and Privates Company should be able to meet the challenge of economic growth to enhance to quality of research, by creating a true European Research Area, which pools all the innovation efforts.
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Over the last decade, communication as well as knowledge sharing mechanisms have changed drastically thanks to Google and social media engines such as Facebook, Linkedin etc. Most of these have been founded by American programmers and have enabled a paradigm shift for the world to gather knowledge. These platforms also display the network externality characteristic, a term coined by economists, which simply means the personal utility of consuming a good increases as more and more people consume it. With such dynamic platforms it was interesting for me to note the take of the American presidential candidates on the issue of online privacy.
I felt Obama administration has a more holistic approach to the online privacy issue where it understands that this is a sphere where a law can be implemented only by including all stakeholders – consumers, data collection agencies and users of consumer data. The ‘ Consumer Privacy Bill of Rights’ introduced this February is the first step in this direction that seeks to at least give consumers the right to protect their personal data. What we, as consumers, also need to understand is that platforms such as Google, Facebook work on a ‘give and take’ mechanism and that these platforms are relevant to us to gather information only if they have an information database which in turn is built by gathering data from again, us consumers. Hence, I consider Obama’s take on it which includes all stakeholders more practically appropriate than Romney’s take which gives paramount importance to individual users.
It is also a dynamic legislation which would keep changing as the online platforms evolve but for today I regard consumer awareness about the information being tracked as highly important. So, in addition to introducing a bill what is also needed is a mechanism to track its effectiveness and monitor the online platforms and swiftly amend the bill. These platforms have enabled research by making knowledge gathering much simpler and hence a healthy balance between monitoring and growth of online platforms would be the key to further innovation.
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After studying the US Presidential debate in detail, it would be right to say that both the presidential candidates concur to solow’s growth model and acknowledge the contribution and impact that innovation and technology has had on economic growth in the US. However both the candidates differ in their approach to bring about this economic growth as far as policy formation is concerned. In my view Mitt Romney in his speech has focused on improving broader fundamental framework conditions such as tax, trade, immigration, education, regulation etc. to promote innovation. One of the policy measures proposed by Mitt Romney that caught my attention was his proposal to raise the visa caps for highly skilled foreign workers. This topic is of relevance to not only U.S citizens but also several others who go to U.S for higher studies and jobs, fitting the relevant criterion.
Show lessU.S for long has succeeded in attracting scientific talent from all over the world. According to a 2011 study by the Partnership for a New American Economy the first-generation immigrants or their children have founder roles in more than 40% of the Fortune 500, which had combined revenues of greater than $4.2 trillion employing more than 10 million workers worldwide. But this very source of talent is now on a decline due to strict visa regulations and a number of other laws that the Obama administration implemented. This has hindered growth in innovation and technology sector, limiting the economic growth as well. So Mitt Romney policy to raise the cap for highly skilled foreign workers can prove to be beneficial for the economy as a whole.
However in my opinion Mitt Romney’s policy is a very short sighted one. Raising the cap might provide a temporary boost to technology and innovation sector, but is not a real solution for sustaining innovation and growth. The underlying issue of immigration will still persist. It will be interesting to see how long U.S can justify legalizing selective immigration. As Illinois Representative Luis Gutierrez said “Republicans are only willing to increase legal immigration for immigrants they want by eliminating legal immigration for immigrants they don’t want,”
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I’d like to continue offering my point of view issued the innovation policy in the United States. I’ve taken a look at the President Obama’s Strategy for American Innovation, a document published in September 2009 and updated in February 2011 (see: http://www.whitehouse.gov/innovation/strategy ). In this document, Barack Obama describes the essential role of innovation in the U.S. past and future prosperity, the central importance of the private sector as the engine of innovation, and the role of government in supporting our innovation system.
One highlighting point I would catch is the energy innovation. Barack Obama would like to promote a national energy strategy to transition from fossil fuels to renewable energy sources and he wants to continue tax breaks for renewable energy while eliminating subsidies for oil, natural gas and coal production.
Personally, I like to welcome this policy. Although the discussion about renewable energies is a permanent topic, it definitely promises growth. Finally, I think that innovations in this sector have to take place because fossil fuels running out of supplies the next 50 or 100 years. Other countries like Germany or China take a leading role. Especially China as the worldwide greatest solar cell manufacturer could achieve more growth.
Otherwise, this competitive environment and other economic circumstances, e.g. current developments on commodity markets, demand the right investments in the right companies and industries. As an example, the Obama administration’s 535 million dollar investment in the now-failed solar energy company Solyndra stifled innovation (see: http://en.wikipedia.org/wiki/Solyndra ). Focusing the market on a single company, investors cause to overlook investments in smaller competitors.
In my opinion, a national or regional research and innovation strategy including tools like SWOT analysis and monitoring systems could contribute to broad renewable energy mix. This leads to so-called regional industrial clusters or even industries with new energy concepts emerge.
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When an economy is in recession such as some European Union countries, their government and their companies should invest more in some political innovation in order to try up the economy situation. But in order to begin developing what I think about this post, first I would have to say that the innovation in the economy isn´t be practice of random form, so the privates and publics companies can´t developing an innovation theory or innovation company´s planning without firstly perform a market research.
They have to investigate about the economy´s situation of each country, try to know with the above market research what the economy and the society need.
Then is when the companies should aside part of his profits and invest this in Research and Development (R+D). This work is only possible with the big companies, so they get so many profits per year in order to invest in R+D.
This may be say us that the relations between the big private and the public companies would be able to be profitable. It is so important that the companies work together to get a better aim. Even, it would be able to perform more institutions about the innovation where the big companies of the European Union could contribute with his owns ideas and could work together. The results would be better if they work as a team.
I´m completely in accordance with Marta when she said that it would be important create some European funds in order to the collaboration between the companies aren´t be only on the same country but it could be in the all European Union.
Finally and to conclude this post, I believe that nowadays the world economy is constantly change, there are so many recession, so many crisis, (like Spain, Greece) on the other hand we can find another countries with a great economy, but what is evident is that all the countries (his companies and his governments) must looking for a way what they invest more in Research and Development because this is the future, this is the way in order to grow in the economy and the way to make a difference.
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In the following, I will take position regarding Mitt Romney´s propositions on the ScienceDebate at September 4, 2012 (see: http://www.sciencedebate.org/debate12/), especially his statements about „Innovation and the Economy“.
According to Romney, the implementation of innovation should begin on Day One of his tenure, with focus on simplifying the corporate tax code, reform job retraining programs, reduce regulatory burdens and protect American intellectual property. For that, a detailed plan with critical structural adjustments has been prepared.
In the part about Trade, my attention fell on the aspect, that Romney wants to create a so called „Reagan Economic Zone“, which dues to the economic policies accomplished by Ronald Reagan during the 1980s. The main aspects of Reagan’s economic policy were:
1. reducing the growth of government spending
2. reducing income tax and capital gains tax
3. reducing government regulation of economy
4. control money supply to reduce inflation.
Reagan presented his economic proposals as a return to the free enterprise principles. At the same time he represented the supply-side economics (in opposition to Keynesian demand-side economics). The proponents, that the tax rate cuts would more than pay for themselves, was influenced by a theoretical taxation model based on the elasticity of tax rates, known as the Laffer curve (more e.g. http://www.laffercenter.com/arthur-laffer/the-laffer-curve/). It predicts that excessive tax rates actually reduce potential tax revenues, by lowering the incentive to produce.
This zone would offer the principles of free trade at the international level. I think, this could be very attractive to a lot of developed – and also developing – nations. The dynamism of this economic zone would function like a magnet to countries, willing to have greater access to other markets. It would also serve as a mechanism for confronting nations (like China), that disregard trade rules while free-riding.
Romney bases his platform on the theory of supply-side economics as well. This indicates that tax cuts stimulate growth. (Supply-side economics seemed successful during the Reagan Administration, when tax cuts did boost the economy out of recession. However, the maximum income tax rate was 70%, and not about 30% the US have today, what makes it questionabel if the same effect is to be expected.)
In my opinion, in times of globalization it is very important to create kind of a free world market, which gives the possibility to everyone the have access to innovative goods. Transportation (also of knowledge) is easier and cultural barriers are reduced. The interdependence of the nation-states, the flexibility of corporations to operate across borders and the communication between the individuals and corporations increases. But there are also aspects against a complete „Free Zone“, because there could be a lack of regulation. It could cause people to lose their jobs as work is being outsourced to countries, where the cost of labor is lower. There is a risk that the corporates could rule the world, as there is a lot of money invested by them. Poor countries could be exploited by the richer ones. But not to end up in stagnation, it is always be important to innovate and develope, which is easier when having access to a width of markets, which provide the best prerequisites, while still being regulated by given rules/laws.
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In his answer concerning innovation in Science Debate 2012, the Republican presidential candidate Mitt Romney stresses to start promoting innovation in the U.S. right after his election “on day one”, including policy measures like simplifying “the corporate tax code”, reforming “job retraining programs”, reducing “regulatory burdens”, and protecting “American intellectual property around the world”. Furthermore he is planning to reform the immigration system to attract smart and skilled workers.
At first glance Romney seems to make use of a broad variety of policy measures to boost innovation, but in fact most of them don’t aim for innovation itself. The measures mentioned above certainly lead to benefits for science and technology industries, e.g. lower tax rates or less effort in fulfilling regulations due to a streamlining of them, which means saving time and money. On closer consideration these measures can rather be allocated to the fields taxation, immigration policy and so forth. Although Romney’s answer has at least three times the length of Obama’s, from my point of view it appears to be very vague and possible policy measures for long-term leadership in innovation are only mentioned at the end of his statement: besides reforming the educational system in order to enable higher education for a greater number of high school graduates, Romney states to “focus government resources on research programs that advance the development of knowledge”, without giving concrete figures. He also doesn’t refer to current innovation issues, which creates an impression of Romney lacking innovation knowledge. It is conspicuous that Romney tries to attack Obama’s innovation policy by mentioning the “misguided attempts to play the role of venture capitalist” instead of focusing on his own propositions. As a consequence I don’t consider his answer in this debate very convincing.
In my opinion it is important to strengthen basic research and therefore investing in public research facilities, such as universities, because basic research forms a basis for further research and development. Referring to the answer given by Romney, his focus is on the private sector. This tends to be unrewarding, because basic research is primary performed by the public sector. Basic research doesn’t generate specific commercial applications, so investments in basic research by private companies are rather low. To develop products and technologies providing significant purposes, the private sector relies on this basis. In combination with well-educated graduates, who can benefit from a reformed educational system, a broad funding of basic research should represent a promising approach of maintaining a world leader in innovation.
Show lessObviously, I agree with you that investing in universities is very important 😉
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The policy measure I decided to give my opinion on is one of the thirty action points proposed by the European Commission in its Innovation Union initiative . Concretely, I selected the proposal called ‘Creating a single innovation market’ due to the fact that nowadays with the worldwide globalisation process and the integration process facing Europe, we cannot deny that this is a pertinent topic to be discussed about.
Since last year the EU and its Member States are looking forward to unify the regulatory framework in key areas . This could be seen as a step for further integration and solidification of the EU. The latter would thus become ‘a common heterogeneous market where standardisation favours innovation’ . If this unification is achieved, incentive could be given to firms in every Member State to either start or pursue their research as every Member States would be on the same ground.
It is irrefutable that access to knowledge could be boosted by this single market; this process would ease the exchange of knowledge among all the Member States.
Moreover, becoming a single innovation market, the EU could tend to be a more competitive market. More competition means more output on the market, and as Kenneth Arrow argued: “a firm in a competitive market would have high output levels, and so cost of an innovation could be spread thinly” .
This could help in the crisis recovery. Indeed, in its conference at TEDxULg, Florent Bernard who works as an Innovation Policy Officer at the European Commission depicted that “countries which invested the most in research and development were the one that are getting out of the crisis faster today” . Hence, by creating this single market, this would enhance innovation in countries and thus benefit the EU.
But aren’t there any shortcoming of this proposal? For example, some enterprises could take advantage of their good position regarding innovation, hence innovation sanity checks should be instituted to guarantee the long-term societal benefits of innovation .
Furthermore, clusters could be formed if, for instance, some countries are already more specialised in research and development than others. Therefore, firms in other states would probably want to locate in those countries in order to benefit from spillovers. In my opinion, small enterprises and universities should receive greater support in order not to lag behind big private firms.
To conclude, I can say that this proposal is a great issue, but actions should be taken forward to avoid potential drawbacks.
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According to me, I think that the Information and Communication Technologies (ICTs) are a good tool to encourage the R&D and the innovation.
Show lessWith the strategy of Europe 2020, the Commission wants to offer, among other things, a smart economy. A smart growth includes education, research and innovation, but also the ICTs. It’s true that one of the main initiative of this program is « the digital agenda for Europe ». It aims to create a single digital market by lowering barriers to fast Internet or by building trust in the online environment. It has already been shown that ICTs are a major growth driver because they explain half of the productivity growth of modern economies. So, there is a link between the ICTs and the R&D and Innovation. For example, a high-speed Internet has effects on the capacity of Europe to innovate, spread knowledge or distribute goods and services. But we know that Europe is lagging in this sector: low levels of investment in R&D and innovation, insufficient use of ICTs,…
To begin, the Commission wants on the one hand to promote the competitiveness of the ICTs industries and services and on the other hand to support the take-up of ICTs and e-business practices by enterprises. Then, the ICTs enable process and product innovation. And, the ICT policy takes into account the SME, too. Because, the entrepreneurship is also a driver of growth, the ICTs offers new opportunities to create networks etc,…
To conclude, because the intangibles assets (in particular human and technologic knowledge or ideas) are more and more important nowadays, I think that the ICTs are a great tool to control, improve and help the circulation of this kind of information. Investments in ICTs are a key factor for firm’s competitiveness but also the overall economic growth.
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I’d like to share my point of view on another key initiative of the European Commission’s Innovation Union: Delivering the European Research Area.
With this initiative the Commission aims to create“a European Research Area framework and supporting measures to remove obstacles to mobility and cross-border co-operation”.
One goal of this initiative is to improve the mobility of researchers across countries and sectors. The benefits of this kind of policy (if it succeeds) is quite straightforward: making mobility of the researchers (and with them their knowledge) easier, facilitates the diffusion of knowledge among participating countries/sectors. Furthermore, the mobility benefits not only the visited institution (may it be an university, a public research institution or private industry) but also the researcher himself, who can acquire new knowledge by the interaction with the local researchers or by the use of the local research infrastructure.
But mobility, especially geographical and permanent mobility, also represents a risk. The researcher who leaves his country in order to continue his career and activity somewhere else, represents a loss for the ‘sending’ country. This may be even more problematic if there are many research-activities leaving the country. This issue is called the brain drain effect, which can in certain extent be detrimental for economic growth.
Another goal of this initiative is the European collaboration in research and development. Collaboration may bring several benefits to the participants: risk-sharing, more and easier access to financing, synergies… . Also, collaboration on an mutual research project can help to reduce duplication, and thus to gain some time by working together on the same project. As for the first goal mentioned above, there is also a risk: the concentration of research activity in the countries/regions that already are doing much research on a high quality level.
Thus, in my opinion, the Commission has to pay attention that the European Research Area will not only lead to a concentration of research activity and high quality researcher in certain region/countries/institutions, but that it will lead to a higher diffusion of knowledge and technology over all the participating regions and thus be profitable for the most national economies as possible.
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In the recent studies carried out by European Commission in the annual research and innovation scoreboard (http://ec.europa.eu/enterprise/policies/innovation/files/ius-2011_en.pdf) European Union development in innovation is considerably lagging behind its competitors, international leaders in innovation – US, Japan and South Korea. Apart from that, emerging economies such as China, India, and Brazil have been diminishing the innovation gap over the past 5 years.
Show lessTherefore the proposed “Europe 2020 Strategy” (http://ec.europa.eu/europe2020/index_en.htm) has mainly been based on setting the innovation as the core element for Europe’s sustainable development. And one particular proposition by European Commission is to develop more complex and technically innovative products. However, to accomplish the stated objectives, and in particular – innovation in products, it is highly necessary to prioritize and improve many aspects in current EU legislation, development and investment strategies. And, as proposed by Marta Ripamonti earlier, is vital to improve the interaction between industries and research institutions, universities, so that scientific research and technological innovation goes “hand-in-hand”.
Proposed policy measures by European Commission should be defensible on both conceptual and practical grounds, so stimulating entrepreneurs to innovate and invest in R&D and encouraging entrepreneurial incentives should be set as priority Nr.1 and should be realistically achievable. However, the euro-zone crises have weakened the Europe’s economy – governments have significantly cut their spending (therefore also investing) and the tax burden has only increased, so how this can boost entrepreneur incentive to invest and innovate? As it is already known, higher taxes can discourage the investment rate and attenuate R&D funding, while alleviating the tax burden will have a modest positive effects on overall economic growth. It is undoubtedly true that high value-added industries, such as chemicals, “high-tech”, machinery manufacturing, etc drive growth, so wouldn’t it be reasonable to alleviate the taxes in such significantly important industries?
Another preposition that has a great importance on product innovation is to lower the costs of patent registration and their utilization. With realistic approach and possible positive outcome on such preposition you can familiarize yourself by following the link provided – http://ec.europa.eu/internal_market/indprop/docs/patent/patent_fees_report_en.pdf , but at this point seems that European Commission has its own views.
All in all there exists many ways how to help entrepreneurs to develop innovative products, but the real question is – what is the actual level of support and commitment from European Commission to reach the desired inclusive, smart and sustainable growth?!
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When I read on the internet that the biggest part of the growth of the U.S. economy since the second world war was due to science and technology, I wondered what could be done by their government to stay one of the leaders in innovation for the next decades.
In a debate between Mitt Romney and Barack Obama in September, the two U.S. presidential candidates give their opinions about innovation. I am especially interested in Barack Obama’s plan in education to develop innovation skills for American workers.
He says : “To prepare American children for a future in which they can be the highly skilled American workers and innovators of tomorrow, I have set the goal of preparing 100,000 science and math teachers over the next decade. These teachers will meet the urgent need to train one million additional science, technology, engineering and math (STEM) graduates over the next decade.” (Barack Obama in http://sciencedebate.org/debate12 )
With this development in the education, the future capacity of the U.S. to innovate would be higher than today in an economy which is nowadays focused on newness to drive economic growth. More graduates in science, technology, engineering and math should attract innovative ventures and help innovators to achieve their ideas. This should lead to growth in the U.S. economy and then they could keep their competitiveness in global economy.
I think Barack Obama’s interest for education is a good point because innovation is a long term process. Therefore the U.S. has to work now in order to stay competitive tomorrow. Education is a way to work for the future.
These are the reasons why I think that Barack Obama is working on the good points so as to develop economic growth by helping innovation in his country.
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I would like to focus on the debate about Innovation carried out by the two US President candidates.
The first speech I read was Obama’s. It reminded me of the period right after the Second World War – everything was about the USA, its superiority, its people. I understand his opinion has been taylored for the Presidential Campaing so as to obtain consenses, especially in the current difficult climate of mistrust and crisis, but Americans are not the only ones that can innovate, that give birth to new and successful ideas. It looks like President obama is trying to follow President Reagan’s footsteps (“Let’s make America great again” and “Morning Again in America” were R. Reagan presidential campaign slogans in 1980 and 1984, respectively), but time has changed, and innovation cannot flourish in a closed environment.
On the other hand, candidate Romney leverages on US’ solid reputation of sustainer of new proposals and on America’s attractiveness for foreigner innovators and inventors. It’s a positive endless circle.
But I am not sure about how the tax reductions he proposes will work out – Romney needs to be trusted by stakeholders, and in order to do so he must ensure that his plans will last for a long time and that they are worth the investment. But it must be remembered that electors are not only entrepreneurs – rather than just offering lont-term perspectives, I believe he should also talk about how he plans to recover and fill the gap between today’s situation and the moment in which the economy will be ready to face his proposals.
Anyway, the US is still the country were R&D is a reality, where the exchange of knowledge takes place everywhere, where it is possible to develop an idea that has been rejected in other places. Americans created an atmosphere which is really hard to duplicate. Thus, I agree that, to foster innovation, it’s necessary to:
Show less-reduce barriers that block the entrance of foreign people with good proposals
-apply new policies that allow to retain those minds and, of course,
-invest in education – the most powerful tool to grant progress
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For this task, I will talk about the “plan Marshall 2.vert”. The objectives of these actions are similarly the same of the two U.S. presidential candidates’ objectives: to create activities and employment, to boost the education and to care about the environment. We see that the knowledge and the innovation have a place very important in this discussion.
It does seem not far of the Solow model. Of course the Solow model doesn’t integrate the environment; because in 50’s the environment wasn’t at the center of debates. But I won’t describe the entire “plan Marshall 2.vert”, I’m going to give my critical opinion about one axis of the plan.
“Axe II : Un succès à amplifier : les stratégies des pôles de compétitivité et des réseaux d’entreprises. Objectif : Poursuivre la mise en œuvre d’une nouvelle politique industrielle basée sur la mise en réseau des acteurs et, notamment, des pôles de compétitivité. Investissement total : 388 millions d’euros.” http://planmarshall2vert.wallonie.be/
This axis is which who corresponds the most with the chapter 2 (Innovation and economic growth) of the course Economics of innovation because we see that one solution to growth is: the importance of cross-border knowledge spillovers (course of Paul Belleflamme LLSMS2041).
In 2005, the government of Wallonie created some networks of actors and some clusters. It was a huge success. So in the new plan, they invest 388 million of euros to improve the clusters. And they have also created a new cluster: “Environmental Technology”.
For me, it’s a good initiative of the government. We have to assemble the firms of the same sector (Silicon Valley), and companies that need one others to prosper (like a sawmill and a carpentry). As we have seen in the course LLSMS 2041, the clusters have 3 characteristics essential that enable companies to develop and to innovate: “technological externalities, vertical relationships and labor pooling”. I think it’s a good idea, they found an excellent point to boost the growth. They also increase the expense en R&D, but it’s another axis so I won’t develop.
Now I will use the Solow model to explain the plan. Solow said that the output is a function of 3 elements: the knowledge, the capital and the Labor. With the plan, the government develop the labor (“ériger la formation et l’enseignement en fer de lance de l’accès à l’emploi” (plan Marshall 2.vert). The second element is the capital and the government invests 1 billion of euros. And third: the knowledge, I developed previously the axis 2 that permit an increase of the knowledge and the innovation. So, with the Solow model, the output will increase in the future.
To summarize they gave importance of the main point to increase the growth. We will see in a few years if their intentions will be a success.
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As the perspective in the course so far is on the macroeconomic determinants of innovation, the discussion should not only focus on labeled “innovation policies” but also take into account more fundamental macroeconomic policies that affect innovation indirectly. “Innovation policy” cannot be separated from the macroeconomic environment it is embedded in as one can see when investigating the implications for example of Mitt Romney’s “Plan For A Stronger Middle Class”.
(download: http://www.scribd.com/doc/103646979/Energy-Policy-White-Paper-8-23?secret_password=10rki016qc2ergap31c0).
The main goal of the plan is to ensure energy independence of the United States via 6 key measures, 5 of which promote American oil production, while the last one tries to “Facilitate private-sector-led development of new energy technologies”, later specified in the following way: “Instead of distorting the playing field, the government should be ensuring that it remainslevel. The same policies that will open access to land for oil, gas, and coal development can alsoopen access for the construction of wind, solar, and hydropower facilities.”
In summary, the plan increases subsidies on fossil energies while cutting back existing subsidies for renewable energies. What does that mean for innovation? Simplifying, we have two categories of energy that become substitutes to a more and more increasing extent. For what I know about the topic, it is reasonable to define renewables as the more category with more potential for innovation in the long-run, especially when thinking about a very long-run were fossil energies simply went extinct. Both in exogenous and endogenous growth models, Romney’s plan harms innovation as we will see.
Starting with exogenous growth models, even in a simple Solow model (which should work for the scope of this comment as we are dealing with the US) the negative impact of the plan becomes apparent. Knowledge enters the economy exogenously via A. A plan that actively redistributes government-subsidies (a factor externally affecting the knowledge stock) from a innovative technologies to technologies that will sooner or later be overcome simply by the fact of extinction would in terms of this model decrease the potential growth of A and by this of Y. The same result via different logic is reached in a Harrod-Domar setting where growth and innovation are driven by the savings rate: Cheap fossil energies could decrease the incentive to save in order to invest in renewable technologies as the pressure of a high oil price is lowered. (One could argue against that assuming that the cheap oil price leaves resources to be invested in research. But without short-term cost pressure it is unlikely these resources would go in renewable energy research).
But the Romney’s plan anyway sees innovation as endogenous to an economy, else the formulation of “private-sector-led development” doesn’t make much sense. Innovation is not only dependent on exogenous government spending, but also driven by incentives to invest in R&D of private companies. The problem with Romney’s plan can be analyzed for example by assuming a 2 sector endogenous growth model, where one sector produces human capital and thereby knowledge while the second sector produces “production goods”. In absence of an “Energy Indepence Plan” like Romney’s, any company would sooner or later face the problem of increasing costs due to scarcity of oil and increasing oil prices (actually they still do it with Romney’s brilliant plan, it just happens a bit later). This would work as an incentive to actively invest in the development of renewable technologies as they would become cheaper to deploy at some point. This investment would lead to a higher number of people working in the “human capital sector” and increase the stock of knowledge. Romney’s plan distorts this incentive. As fossil fuels receive government subsidies, they became cheaper thus reducing the cost pressure on firms. Without a massive cost pressure, the private sector (especially given the oftentimes short-term orientation of managements) loses incentive to be innovative in renewable energies. In a final point of time where fossil energies are extinct, the US economy could by this have a disadvantage compared to other countries which invested earlier in research in this field.
Summary: 1) innovation is affected by the macroeconomic environment and cannot be encouraged only via “innovation policies”. 2) Romney bases his plan on the assumption that innovation must occur endogenously (else his sixth key measure doesn’t make any sense) 3)Whatever macroeconomic growth model one uses, Romney’s plan always an obstacle for innovation and likely to decrease the growth of the knowledge stock in the economy. Even with Romney’s own assumptions, his plan hinders innovation. And the social (creating jobs in a sector that will stop existing within a couple of decades) and ecological implications of this plan haven’t even been discussed yet.
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I would like to emphasize the importance of the Comission’s initiative for “Enhancing access to finance for innovative companies”, more specifically the commitment to establish a “Risk-Sharing Finance Facility”. On the one hand, this aims at solving the liquidity problem, which oftentimes hampers innovation (many good ideas are not being developed due to lack of funds). At the same time, and perhaps even more importantly, the RSFF (Risk-Sharing Finance Facility) will ensure that the inherent risks of the research projects are pooled. In other words, research is never certain. One cannot know beforehand if the research will have any result and if yes, what will that be. As a consequence, there looms the risk of underinvestment, especially from the risk-averse players/investors.
However, if it will not be designed accordingly, this commitment may have drawbacks as well. For instance, if the risk and the financing are pooled and, say, there is a patent released for an innovation, the future users of that patent may be forced to pay fees to all participating parties, which will be cumbersome and very costly. In the end, this could lead to an underutilization of the respective innovation, contrary to the initial aim (in the words of Joseph Stiglitz, “raising the cost of knowledge”).
Additionally, I think that the initiative to pursue a review of the “State aid research and development and innovation framework” should improve the efficiency of the established innovation system. It is commonly known that sometimes, innovations arise in the areas for which there is already a market and an effective demand. For instance, not many companies would invest in health solutions for the poor countries, since they cannot afford these services, but will instead focus on delivering state-of-the-art solutions (to the extreme, somehow unnecessary) for the developed markets, where they will find buyers. From this point of view, it is very good for the Commission to balance somehow the “true” needs of the markets, since the less-developed countries can also contribute to the future growth of the EU, provided they are taken into consideration when allocating resources for innovation (as the description itself says: design an “effective and flexible instrument to allow for well-targeted public support for R&D&I”, for “innovations addressing major societal challenges, and their best use by Member States”).
Last but not least, one crucial initiative mentioned in the Commission’s Plan was that of “Promoting openness and capitalising on Europe’s creative potential”. In doing so, there will be more open access to the results of research and the knowledge transfer will be facilitated. This also adresses one of the first problems I raised in this comment, that of the cost of knowledge. It has been argued that knowledge is the most important input for more knowledge and that an efficient innovation system has to disseminate the information, not restrict it. Hence, enhancing the transparency and improving access to research should be a self-enforcing mechanism, leading to more innovation and growth in the future.
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I would like to comment on the “Jumpstart Our Business Startups” (JOBS) Act originally introduced by the Obama administration on January 31, 2011 and passed by bipartisan support on March 8, 2012. The bill itself was signed into law by president Obama on April 5, 2012. I would especially like to comment on the possibility to use crowd-funding for companies financing their business.
The JOBS Act allows companies to use funding portals like Kickstarter for public offerings without the necessity to register these with the SEC under certain conditions. Without going into technical details, these conditions limit the amount a private investor can invest into projects based on his yearly salary. These restrictions are imposed to prevent professional investors from undermining SEC authority and instead aims at promoting small investments by multiple participants like private persons – this process has been coined by the term crowd-funding.
In my opinion, crowd-funding is an excellent concept for fostering innovation. Being allowed not to solely rely on professional investors like banks, hedge funds or huge private companies gives any startup more freedom and capabilities in developing its products. Professional investors are mostly interested in the money they can make by taking a stake in a project or company rather than fueling new ideas that could evolve into ground-breaking new products, technologies or services. Of course, successful products are often tied to innovation, however, the more innovative a product the riskier is the possibility of a failure. Opening investments to “the public” also allows the involvement of a total different type of investor. Private persons are in general more interested in the final product than making money. This gives small companies more creative freedom in development. Professional investments often consist of a few big players, who have a natural interest in influencing the project. I’ve been myself working in a small startup for nearly 2 years now and I’ve learned that nothing kills innovation better than making compromises with third parties or the necessity to concern yourself with tasks that don’t lie at the core of the project. Since the JOBS Act also relieves public offerings from SEC regulations, small startups will have to concern themselves with less bureaucracy.
On the other hand, crowd-funding also proposes certain risks. There is always the problem of free riders, who try to scam money from investors. This problem becomes even more prevalent, when private persons invest. They have naturally less knowledge about and less influence on their investment. Naturally, the success and perspective of small startups is ambiguous. This however, is an inherent aspect of economics of innovation. Funding portals should therefore be required to enforce a minimum standard for all business proposals.
In the end, I am convinced that the advantages outweigh the risks of this bill. Crowd-funding has already seen many success stories. Double Fine and inXile have both successfully financed upcoming video games that have been completely ignored by established publishers.
Show lessSee my own work on crowdfunding:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2151179
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1836873
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With reference to the Program proposed by the European Commission, called Communication on Innovation Union published on 6 October 2010, I wish to offer my point of view on one of the thirty action points, related to the issue linked to the growth of the Innovation Initiatives.
I think it could be quite interesting to focus the attention on the objective called Promoting Excellence in Education and Skills Development (see: http://ec.europa.eu/research/innovation-union/index_en.cfm?pg=action-points ); my attention has been turned on it, because one of the most important international index, the HDI (Human Development Index – established by the United Nations in 1990, for ranking the level of development between nations) uses the level of education as one of its indicator; the level of education is taken in consideration because the single level of GDP is not enough for measuring the level of development: the GDP index takes into account just the sales and the purchases of a nation.
This addresses to reason on the fact that education is one of the powerful engine for the development of a nation and, as a consequence, the implementation of professional exchanges and the rising mobilization among the research units in Universities and Companies – that want to have access to this kind of knowledge – is an important area of investment for the European Union aimed at overcoming the economic and social crisis that is hitting the global economy.
It’s moreover attractive the idea, proposed by the European Commission, to make the collaborations between private firms and research workers – that comes from Academic world and that they want to interact with the companies for developing innovations – easier; this new channel of development, that would be opened by the European Union reforms, is pretty important in my opinion because a lot of times there is a lack between the demand and the supply of research.
For this reason, it could be relevant the creation of specific European funds, fit for implementing the collaborations between researchers and private companies that don’t belong to the same nation: this could be an incentive for moving knowledge from one nation to the other and it could even increase the circulation of information – that is a factor often taken in consideration in nowadays speeches about information and development – .
At the same time the cooperation between two different types of sector – private and public one – could lead to some problems, as: the protection of IPRs (Intellectual Property Rights) and confusion/misunderstanding on the distinction between Technologic or Scientific Innovation. This should address the European Commission to create a set of rules/regulations that regulates in this specific field.
Just for summing up my opinion, I think that the decision taken by the European Commission – implementation of knowledge exchanges – is a step forward the awareness that education is the foundation of development.
Show lessThank you for being the first one to propose your views.
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