Innovation and Competitiveness: A Field of Sloppy Thinking

If they are to remain competitive and maintain performance at a high level, economies need to be innovative. To promote innovation they need to spend on research and development (R&D). The inference is, therefore, that if they also want to enhance competitiveness, countries have to increase R&D spending. This supposed need to increase R&D efforts, coupled with the enormous importance of competitiveness, explains why there is always much ado in the media when new international rankings on R&D spending are announced. Furthermore, governmentand eu-sponsored reports, such as the Sapir Report (2003: 34), often mention these rankings and – together with politicians and interest groups – regularly call on the relevant authorities (governments and companies) to spring into action and to raise their R&D spending. With R&D, the emphasis is generally on input figures, despite the fact that, generally speaking, the relationship between input and output is not clear-cut. Nevertheless, the ease with which the input–output equation is formulated in the case of innovation is remarkable. In other fields, matters are otherwise. Scandinavian or us spending on R&D, for example, is presented as a positive example, but no one does the same with us health care spending, which is much higher than that of most other comparable countries: it is well known – and it has been a major issue in us presidential elections since the 1990s – that the us health care system excludes millions of people and does not prevent a relatively high level of infant mortality (cf. oecd 2007a: 9-12). Is there any reason to assume that this is an exception and that »output matches input« is the rule? Does the assumed correlation between R&D spending and innovation, and subsequently between innovation, competitiveness, and economic performance, really exist? The answer is that the relations between these parameters are much more complex. There is some – although no more than that – correspondence between Innovation and Competitiveness: A Field of Sloppy Thinking