Innovation will be central to boosting growth – OECD

Knowledge is the main driver of today’s global economy and countries need to harness innovation and entrepreneurship to boost growth and employment, the OECD has said.

The Paris-based organization said in its Innovation Strategy that innovation will be key to a sustainable rise in living standards in OECD countries.

According to the strategy, governments have a key role to play to boost innovation as some essential research often attracts little private-sector support.

The OECD also said that the current economic crisis makes it even more necessary to push through reforms: “Governments battling to get their economies onto a sustainable growth path need to reduce administrative hurdles for new and existing companies and make their tax policies more friendly to innovation and entrepreneurship.”

“Many governments raised spending on education and research as part of their stimulus packages,” said OECD General Secretary Angel Gurría. “That was a wise move. Now, as they embark on fiscal consolidation, they should be careful not to jeopardize long-term growth by cutting spending on activities that are essential for a country’s future.

“But they also need to ensure that they do not waste the money invested in fostering innovation.  Simple measures such as cutting red tape, reforming universities to give them more independence and opening up access to more public research data (from mapping the human genome to weather maps) can all help to increase the efficiency of public spending on innovation.”

The OECD also pointed to young firms as being the key to job creation. It cited the example of the US, where firms less than five years old have accounted for nearly all of the increase in employment in the private sector in the past 25 years.