Friday, September 12, 2008

What is a big share of the "innovation system"

The Government has received its report on innovation from Terry Cutler and his committee. I haven't waded through it yet - but note that no hard copies of the report are available only the online version, and the Criky story with the Cutler comment on copyright.

This blog post is about the interview Dr Cutler gave on Lateline Business. In the interview he said "First of all, focus on your strengths. I mean, Australia is a small economy in global terms; we're roughly two per cent of the world's innovation system."

I'm assuming Dr Cutler thinkks that one's share of the global economy is the same as one's share of the "global innovation system". For this he uses the 2% number most commonly used. However if you use World Bank numbers the figure and go to two decimal points the number is 1.51% (on a table revised on 10 September 2008).

While that sounds small, when you realise there are some 200 countries it makes us three times the size of an "average" economy. By rank we are the fifteenth largest economy on the planet - ahead of Sweden on 19(Ericsson, Volvo, Saab), Denmark at 27 (Lego), and Finland on 32 (Nokia).

The reality is that Australia faces another disadvantage compared to these economies in being more remote from sizeable markets. However our biggest disadvantage remains our ability to be fat dumb and happy on the back of resource endowments.

What we don't need is people writing innovation reports perpetuating the myyth that this is a small economy.

1 comment:

Richard Chirgwin said...

Thanks, David, for pointing this out... it makes for bad public policy when people recite and reinforce myths.