Overview & Comments

Key Points

Recognising that economic development increasingly relies on innovation, the Australian Business Foundation commissioned the present study to monitor further Australia's innovation performance, building on the findings of the Foundation's inaugural report, The High Road or the Low Road: Alternatives for Australia's Future?, published in 1997.

The current report provides a brief overview of key indicators of innovation, with particular emphasis on data that have emerged since the original study. A broad range of indicators is used in order to compensate for the limitations of individual indicators, to emphasise non-R&D measures of innovation and to examine performance in different aspects of the innovation process.
The indicators reviewed are:

• innovation propensities and expenditure;
• R&D expenditure and employment;
• training and skills;
• venture capital;
• machinery and equipment investment;
• industry structure; and
• trade patterns.

Innovation depends on a series of different investments and activities undertaken by businesses and occurs within a framework of institutions and organisations which lie partly in the private and partly in the public sector. These include knowledge-generating and diffusion organisations and regulatory frameworks which together form what has become known as a country's National System of Innovation.

This report focuses only on innovation investments made within the private sector. The spotlight is on Australian businesses, although this in part relies on a public policy environment conducive to private sector innovation.

There are four key areas where Australia has performed relatively well over recent years:

• Knowledge-Based Service Industries
• Machinery and Equipment Investment
• Venture Capital Investment
• High Skilled Jobs

These trends, if continued, will help generate an industry structure better equipped to capture value from Australia's knowledge-base. In respect of these indicators, Australia seems to be developing a more sustainable development path – one more likely to pay higher wages, in return for higher levels of innovation and productivity.

This report finds that Australia's innovation performance over the 1990s has been mixed.

The report uncovered five particularly concerning negative trends in the following areas:

• Innovation Rates
• R&D Personnel and Expenditure Levels
• Australian Management Skills
• Size of the Manufacturing Sector
• Training Commitment

On balance, therefore, Australia's innovation performance has not been up to world class standards over the past few years.

Table of Contents

Figures and Tables

Preface

Executive Summary

Introduction

Section 1: Innovation Propensities and Expenditure

Section 2: Business Research and Development Expenditure

Section 3: Business Employment in Research and Development

Section 4: Training and Skills

Section 5: Venture Capital

Section 6: Machinery and Equipment Investment

Section 7: Industry Structure

Section 8: Trade Patterns

Conclusions

Appendix A: OECD Technology Classification of Manufacturing Industries

Appendix B: Commonwealth Government Support for Higher Education Research

Bibliography

Related Knowledge

• Innovation - a retrospective (Opinion)
  Fri Aug 16 2002 | Narelle Kennedy, Chief Executive, Australian Business Foundation

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