Perhaps one of the most interesting and least understood questions in technology and innovation policy is why some countries are good at innovation and others are not. To better explore this issue, the Information Technology and Innovation Foundation (ITIF) hosted a discussion between Georgia Tech professor Mark Zachary Taylor and ITIF President Rob Atkinson on the causes behind innovation, specifically focusing on Taylor’s book The Politics of Innovation.
In his book, Taylor synthesizes more than 50 years of theory and research on national innovation rates, bringing together the current political and economic wisdom and the latest findings about how nations become science and technology leaders. To begin the presentation, he listed the most innovative countries—the United States, Japan, Sweden, Canada, Switzerland, and Germany—and the most rapidly innovating countries—Finland, Taiwan, Israel, Singapore, and South Korea. Notably, these countries are very different from each other, from politics and economics to society and culture.
Because of these differences, it can be hard to pinpoint what makes these countries so innovative. According to Taylor, traditional political and economic frameworks do not provide adequate answers to this question. Size, resource scarcity, military spending, and labor abundance do not fully account for a country’s innovation. For example, countries that invest heavily in their militaries (the United States and Israel, for example) aren’t more innovative than those who don’t, such as Switzerland.
Likewise, a country’s policies do not impact innovation as profoundly as many may assume—Japan and the United States have drastically different economic policies, yet both remain innovation powerhouses. Even whether a country is a decentralized democracy does not play a huge role in a nation’s innovation success. For example, plenty of established democracies haven’t been particularly innovative. Granted, Taylor noted that policies and cultural traits do influence innovation, just not to the significance that many have previously assumed.
According to Taylor, there’s no single set of policies that a country must adopt in order to innovate. “Countries don’t have to be like America or Japan or China in order to get ahead. They can design their own sets of policies and solutions to fit their particular circumstances, economies, politics, histories, and cultures,” he said.
So, if policies and cultural factors aren’t the main drivers behind innovation, what causes it? According to Taylor, it all comes down to how countries build their networks—or “innovation ecosystems,” as Atkinson called them. Countries that are able bring together the science labor force, provide it with resources, and then build links between it and the business sector are most likely to be successful at innovation.
Two countries Taylor highlighted as being particularly good at this are Taiwan and Israel. In the late 1960s, Israel created highly elite science and technology units in the military. While new technologies were being developed, private companies began popping up, often with partial funding or grants from the government. Israeli business leaders would often come work in the government, then reenter the business world, creating a sense of trust between the public and private sectors. In addition, the government helped companies build networks with different business groups in the United States. The nation’s networking efforts were so successful that Israel was listed as a leading country on the NASDAQ by the 1990s. Taylor noted that even if other countries have established infrastructure, abundant resources, and a strong labor force, they are less likely to succeed at innovation without building networks like Israel did.
After Taylor’s presentation, he and Atkinson sat down for a conversation on innovation. Specifically, they focused on why countries innovate. According to Taylor, science and technology funding can be controversial, since others may feel that other government projects—infrastructure, welfare, or tax cuts—deserve more backing. In addition, science and technology innovation causes disruption and can often eliminate jobs or even entire industries. As Atkinson pointed out, within the United States, there seems to be a “heretical” revulsion to any sort of innovation that threatens jobs—even though innovation often leads to economic and social benefits. For example, autonomous vehicles receive a lot of criticism since they would transform the transportation industry, potentially eradicating trucking jobs. These can prove to be significant barriers to whether a country invests in innovation.
Countries also can innovate in response to a threat. Often countries want to remain competitive and perceive the threat of falling behind as their main motivator. For example, the United States dramatically accelerated its technology research after the Soviet satellite Sputnik was launched into orbit. In the same vein, Taylor believes that during the Cold War, Finland may have chosen not to innovate to maintain peace, as too much economic disruption could have led to dire consequences. After the Cold War ended, the nation wanted to compete economically, and thus began focusing a lot more on innovation.
Overall, innovation is a goal most countries strive to achieve. According to Taylor, this likely won’t happen without governments actively bringing stakeholders together and providing them with the networking resources to become more innovative.
Follow the discussion on Twitter using the hashtag #ITIFinnovation.