In this addition of Bridges, published by the Office of Science & Technology at the Austrian Embassy, Senior Analyst Stephen Ezell reflects on the current race for global innovation advantage. The last decade has seen an increasing realization by economists and policymakers alike that it is not so much the accumulation of more savings or capital but rather it is innovation - the improvement of existing or the creation of entirely new products, processes, services, and business or organizational models - that drives countries' long-run economic growth and improvements in standards of living. As a result, a fierce race for global innovation advantage has emerged, as countries compete intensely to realize the highest levels of innovation-based economic growth.
To advance their competitiveness in this race, many countries have implemented thoughtful and constructive national innovation policies aimed at boosting the ability of companies and organizations in their economy to become more productive and innovative. Other countries are trying to win the race by deploying innovation mercantilist practices that distort global trade by trying to redirect the location of innovation (e.g., research and development) and production (e.g., manufacturing) activity to their shores at the expense of other countries.
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