National Innovation Systems: Why They Are Important, And How They Might Be Measured And Compared

We shall argue that the notion of ‘national systems of innovation’ is a useful one, since it treats explicitly what was ignored in earlier models of technical change: namely, deliberate ‘intangible’ investment in technological learning activities that involve a variety of institutions (principally business firms, universities, other education and training institutions, and governments), links amongst them and associated incentive structures and competencies. Considerable diversity–indeed divergence–exists amongst OECD countries in the level and sectoral pattern of business investments in technological learning, and in the quality of support structures in basic research and workforce skills.

Some of this international ‘diversity’ is not economically and socially desirable: in particular, persistently low investment in business R & D and related technological activitics, and in associated workforce skills, which help determine both long-term economic growth rates, and the level of national demand for basic research and associated training activities. Other elements of international ‘diversity’ can be seen as inevitable or desirable: in particular, differing national patterns of technological specialisation that reflect cumulative and localised paths of technological learning, and that strongly influence patterns of structural change and comparative advantage in trade.