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A Comparative Macro-level Assessment of New Zealand's ‘National Innovation System’
Abstract
It has been argued that the power of the concept of a ‘National Innovation System’ (NIS) lies in its comparative nature. Adopting this viewpoint, we provide a comparative snapshot of New Zealand's NIS. Using macro-level indicators to measure innovation, knowledge absorption and diffusion, we compare the performance of New Zealand with that of other OECD economies. The data indicate that New Zealand continues to have a weak NIS, despite major changes to its research, science and technology sector since the late 1980s, and despite its openness to foreign direct investment. We conclude with some general policy considerations to remedy what, by international comparison, still seems to be a NIS failure in New Zealand. The paper also suggests directions for further research.
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NOTES AND REFERENCES
Earlier versions of the paper were presented at the New Zealand Association of Economists Annual Conference, Wellington, September 1998 and the Seventh Annual Educators Conference of the New Zealand Strategic Management Society, Massey University, Palmerston North, February 1999.
See, e.g., B.-$AR. Lundvall, National Systems of Innovation: Towards a Theory of Innovation and Interactive Learning, Pinter, London, 1992; R. Nelson, National Innovation Systems: A Comparative Analysis, Oxford University Press, New York, 1993.
D. David and D. Foray, ‘Information distribution and the growth of economically valuable knowledge: a rationale for technological infrastructure policies’, in M. Teubal, D. Foray, M. Justman and E. Zuscovitch (eds), Technological Infrastructure Policy: An International Perspective, Kluwer Academic Publishers, 1996, pp. 87–116.
R. Lucas, ‘On the mechanics of economic development’, Journal of Monetary Economics, 22, 1, 1988, pp. 3–42.
K. Arrow, ‘The economic implications of learning by doing’, Review of Economic Studies, 29, June 1962, pp. 155–73.
N. Rosenberg, Inside the Black Box: Technology and Economics, Cambridge University Press, Cambridge, 1982.
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OECD, Technology and Industrial Performance, Paris, 1996a.
See, among others, Lucas, op. cit.; P. Romer, ‘Idea gaps and object gaps in economic development’, Journal of Monetary Economics, 32, 3, 1993, pp. 543–73; E. Borensztein, J. De Gregorio and J.-W. Lee, ‘How does foreign direct investment affect economic growth?’, Journal of International Economics, 45, 1, 1998, pp. 115–35.
OECD, op. cit., 1996a, p. 18.
Ibid.
D. Archibugi and J. Michie, ‘Technological globalisation or national systems of innovation?’, Futures, 29, 2, 1997, pp. 121–37.
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F. List, The National Systems of Political Economy, Augustus McKelly, New York, 1841, reprinted 1966.
C. Freeman, Technology Policy and Economic Performance: Lessons From Japan, Pinter, London, 1987. For a discussion of historical perspectives of NISs, see C. Freeman, ‘The “national system of innovation” in historical perspective’, Cambridge Journal of Economics, 19, 1, 1995, pp. 5–24.
M. McKelvey, ‘National systems of innovation’, in G. Hodgson, W. Samuels and M. Tool (eds), The Elgar Companion to Institutional and Evolutionary Economics: A-K, Edward Elgar, Hants, 1994, pp. 366–9.
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Patel and Pavitt, op. cit.
Archibugi and Michie, op. cit., pp. 127–8. Lundvall, op. cit. and Nelson, op. cit. provide similar, but not identical, lists of NIS elements and characteristics.
See, e.g., Archibugi and Michie, op. cit., and the references cited therein.
The New Zealand Knowledge Basehttp://www.morst.govt.nz
Ibid., p. 5.
A Review of Available Information on the Supply of Scientific and Technical Human Resources in New Zealandhttp://www.morst.govt.nz/pubs/report59/index.htm
Moreover, there are difficult issues involved concerning data comparability, e.g. historical data may have been lost or is in a different format and definitions used for particular indicators differ between data sources. See Walker and Edwards, op. cit., p. 21.
A Profile of the Human Capital Resource in New Zealandhttp://www.frst.govt.nz/public/p&e/humancap/
A Profile of Mew Zealand's International High Technology Competitiveness in Manufacturing Production and Tradehttp://www.morst.govt.nz/pubs/infocamp/hightech/index.htm
Ibid.
Technological Learning and Knowledge Applications Reviewhttp://www.frst.govt.nz/public/p&e/techlearning/contents.htm
See G. Crocombe, M. Enright and M. Porter, Upgrading New Zealand's Competitive Advantage, Oxford University Press, Auckland, 1991.
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See, e.g., D. S. Mowery and J. E. Oxley, ‘Inward technology transfer and competitiveness: the role of national innovation systems’, Cambridge Journal of Economics, 19, 1, 1995, pp. 67–94; M. Gittleman and E. Wolff, ‘R&D activity and cross-country growth comparisons’, Cambridge Journal of Economics, 19, 1, 1995, pp. 189–208.
Lucas, op. cit.
Crocombe et al., op. cit.
It is well known that R&D intensity might understate innovation in small firms (see, e.g., Nelson, op. cit.). Therefore, measures such as the degree to which products are adapted, or the number of new products introduced by a firm, might be better indicators.
Walker and Liu, op. cit.
See, e.g., J. Fagerberg, ‘Why growth rates differ’, in G. Dosi, C. Freeman, R. Nelson, G. Silverberg and L. Soete (eds), Technical Change and Economic Theory, Pinter, London, 1988a, pp. 432–57.
We acknowledge that these measures do not capture the quality of education, on-the-job training or work experience—all of which contribute to the stock of human capital.
See, e.g., D. Coe, and E. Helpman, ‘International R&D spillovers’, European Economic Review, 39, 5, 1995, pp. 859–87; H.-J. Engelbrecht, ‘International R&D spillovers amongst OECD economies’, Applied Economics Letters, 4, 1997, pp. 315–9.
OECD, The Knowledge Based Economy, Paris, 1996b.
A. Kristensen and B.-$AR. Lundvall, Innovationsaktivitet i Dansk Industr 1984–1988 (Innovation Activities in the Danish Manufacturing Sector 1984–1988), Notat, No. 2 (Industri-ot Handelsstryrelsen, København), 1991, cited in Lundvall, op. cit.
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M. Robson, J. Townsend and K. Pavitt, ‘Sectoral patterns of production and use of innovations in the UK: 1945–1983’, Research Policy, 17, 1, 1988, pp. 1–14.
OECD, National Innovation Systems, Paris, 1997c.
Ibid.; Stevens, op. cit.
See, e.g., J. Schmookler, Invention and Economic Growth, Harvard University Press, 1966; F. M. Scherer, ‘Inter-industry technology flows in the United States’, Research Policy, 11, 4, 1982, pp. 227–45; H. van Meijl, ‘Measuring inter-sectoral spillovers: French evidence’, Economic Systems Research, 9, 1, 1997, pp. 25–46; E. Wolff, ‘Spillovers, linkages and technological change’, Economic Systems Research, 9, 1, 1997, pp. 9–23.
See, e.g., M. Pianta, ‘Technology and growth in OECD countries 1970–1990’, Cambridge Journal of Economics, 19, 1, 1995, pp. 175–88, and J. Fagerberg, ‘International competitiveness’, The Economic Journal, 98, 1988b, pp. 355–74, who both link expenditure on R&D and patent applications with economic growth.
A. Bollard, D. Harper, with M. Theron, Research & Development in New Zealand: A Public Policy Framework, Research Monograph 39, New Zealand Institute of Economic Research, Wellington, 1987; M. C. Probine, Report on Science and Technology Policy Formation, State Services Commission, Wellington, 1984.
P. Winsley and L. Hammond, ‘Policies for transforming the science and innovation system in New Zealand: 1988–1997’, Prometheus, 15, 2, 1997, pp. 267–78.
Crocombe et al., op. cit.
See Winsley and Hammond, op. cit., pp. 268–9, for a discussion of the implications of the three Acts for research, science and technology in New Zealand.
FORST, op. cit.
P. Winsley, P. Couchman and D. Gilbertson, ‘Future development of New Zealand's science and technology system’, Prometheus, 6, 1, 1998, pp. 57–68.
Winsely and Hammond, op. cit., p. 277.
Such research has been conducted in Norway and Finland—in Norway, an aquaculture cluster has been identified that is typically low technology, but enjoys substantial knowledge spillovers from other industries such as acoustics, optics, electronics and information technology, while in Finland, there is evidence of a forestry cluster that uses high technology inputs from pharmaceuticals, computers, office machinery, radio and television, instruments and optics. See OECD, Diffusing Technology to Industry: Government Policy and Programmes, OECD Working Paper 5(33), Paris, 1997a.
See, e.g., A. Bollard and S. Box, New Zealand: The Ireland of the South Pacific?, a background paper for the Institution of Professional Engineers New Zealand Congress ‘99 Global Markets Forum, March 1999; S. Box, The Irish Economy: Lessons for New Zealand?, Treasury Working Paper 98/1, New Zealand Treasury, Wellington, 1998.
F. Barry and J. Bradley, ‘FDI and trade: the Irish host-country experience’, The Economic Journal, 107, November 1997, pp. 345–65.
M. Akoorie, ‘New Zealand: the development of a resource rich economy’, in J. H. Dunning and R. Narula (eds), Foreign Direct Investment and Governments, Routledge, London, 1996, pp. 174–206; S. Costello, ‘Outward direct investment orientation, structural adaptability and economic revival: a case study of New Zealand’, in J. H. Dunning (ed.), Globalization, Trade and Foreign Direct Investment, Elsevier, New York, 1998, pp. 130–49.
Barry and Bradly, op. cit.
Aakorie, op. cit.; Costello, op. cit.
B. R. Martin and R. Johnston, Technology Foresight for Wiring up the National Innovation System: Experiences in Britain, Australia, and New Zealand, Electronic Working Paper Series, Paper No. 14, University of Sussex, Science Policy Research Unit, 1998.
K. Laursen, ‘Horizontal diversification in the Danish national system of innovation: the case of pharmaceuticals’, Research Policy, 25, 7, 1996, pp. 1121–37.
P. Pavitt, The Social Shaping of the National Science Base, Science Policy Research Unit Electronic Working Paper No. 5, November 1997, p. 4.
Stevens, op. cit.
Patel and Pavitt, op. cit.
See, e.g., Bollard and Box, op. cit.
Crocombe et al., op. cit.
See Pavitt, op. cit.
Ibid., pp. 26–7.
See OECD, Industrial Policy in OECD Countries. Annual Review 1994, Paris, 1994, p. 94.