National/Regional Approach to Innovation Donna

National/Regional Approach to Innovation

Donna

In Europe at the end of the 20th century, a trend shifted away from a technology policy based on the remote economic view that there is a direct relationship between scientific advance and economic growth. The former view provided the government with a policy to use but only if there was market failure.

Economists will prove that innovation is a systemic process embedded in national social and institutional traditions, which have influenced a shift towards a new ideal, innovation policy. The innovation standard suggests a wider role for government policy that can address many aspects of systems of innovation. There are three issues which assist in this new standard of innovation: (1) the characteristics of the policy change and how the institutions of various countries have absorbed the new ideal; (2) the forces that have facilitated change, including the role of international organizations in spreading new ideas: and, (3) how policy diffusion and learning occurs. (Senker, Biegelbauer, Borras, 2005)

Innovation policies have several different factors that influence creation and use of knowledge, but their primary focus is to expand the learning abilities of companies and individuals, and promote a national environment supporting innovation. Most innovation policies focus on developing a close cooperation between the individuals involved in innovation, companies and the scientific community, creating intermediary organizations to link together, and improve the availability of their capital. The new 'innovation policies' differ between countries because the National Systems of Innovation (NSI) approach to innovation is not a unified, formal or an established theory. "It is more of a "conceptual framework' for the analysis of the innovative capabilities embedded in a society, with several different interpretations." (Senker, Biegelbauer, Borras, 2005) majority of this innovation has been brought about by legislation, such as the Government's Superannuation legislation which led to the creation of new financial products that have also been technology-enabled. IBM believes a 'technology led' wave of innovation is now starting; this is called the new on-demand era. There have been significant waves of innovation in the past, during these periods we've seen "back-office reform," the abolition of ledger cards, and the introduction of credit cards. The provision of extended (24-hour, 7-day) access to funds through the installation of ATMS in bank branches were also added during this period. After that E. FTPOSmachines were introduced, now things have advanced even further, we have easy Internet access to our banking information. (Fahrer, 2005)

After years of efforts, Europe has made very little progress toward its goal of surpassing the United States in growth, innovation and productivity by the end of the decade. "There is little sign that Europe's economic decline is stopping or turning around, particularly in the large countries of continental Europe," the European Forecasting Network wrote in its fall report. (Report shows...., 2004)

This report was compiled by teams of economists from universities across Europe. This report was more negative than recent comments by European Union officials at the European Commission, which co-finances the research network.

The economists predicted economic growth in the 12-nation euro zone would be 1.9% next year, compared to the commission's current forecast of 2.3%. They blamed the lack of a rebound in investment spending by European business over the past 3 1/2 years and weak household spending for dragging the recovery down. (Report shows...., 2004)

Veblen... was the first economist to recognize and analyze many aspects of monopoly capitalism." His main point was to show that the institutions of U.S. capitalism have evolved to a new stage. This evolution has profoundly changed capitalism, under monopoly capital there is increased waste, particularly in relation to the sales effort, business expenses, and executive salaries. This waste is critical to the growth process under the institutions of monopoly capitalism. Baran and Sweezy agreed with Veblen's primary thesis about the "subdued conflict between workmanship and salesmanship," in which workmanship is being pursued in the interests of sales of often superfluous goods rather than those that are socially necessary. Baran and Sweezy went so far as to say that Veblen's view of the matter (published in 1923) "as a description of the situation in the 1950s and 1960s... is 100 per cent on target." (O'Hara, Anthony, 2004)

Under monopoly capitalism, true innovation, according to Veblen, is often separated from sales and profit. The engineers produce innovations that can be used by the whole community and the capitalists often destroy technological progress. Baran and Sweezy stress the sabotage of this industry by businesses wasting capitalism such as planned obsolescence, where engineers design a product, light globes, and other commodities that will break down after a certain length of time or use. Another example for instance, computer programs are developed and can only be used on larger and larger hard disks. The problem is not the technological ability of the engineers, but the bottom line of profit drives the capitalists to ignore innovations that might reduce profit. (O'Hara, Anthony, 2004)

Speculative bubbles in the equity, foreign exchange, and property markets, due to the dominance of business profit making over industrial production are of great importance in Japan, the U.S.A., and Europe. The rise and fall of such bubbles contributes much to the onset of recession and further instability in the global economy. Veblen's macroeconomic theorizing has been defined as being "unsystematic" and "highly frustrating," so that-in spite of his powerful insights-his "analytical attempts to lay bare the elements and modus operandi of the economic system are weak and often confused" (O'Hara, Anthony, 2004)