A Cambridge economist and government advisor is calling for a new approach to innovation policy designed to stimulate significant fiscal growth. Investing in technology innovation, although important for the long term, will not address the current need.
Michael Kitson, University Senior Lecturer in International Macroeconomics at Cambridge Judge Business School, insists that a new and broader innovation strategy is needed to operate within a system and not just in individual markets.
Investing in innovation technology generates growth but over a long time, evidenced by all major technologies. Economic growth, he adds, is not generated by the development of ideas.
He says the biggest impact on the economy is the diffusion of ideas. Spreading into the rest of the economy, often extending to what he calls the ‘boring parts’.
“Investing in technology innovation is important for economic growth, but it will not get us out of the economic crisis we’re in at the moment. It will not generate significant economic growth over two to three years’ time. It will generate growth in 10-15 years’ time.”
In an interview for the School’s website, Kitson identified the poor exchange of ideas as an innovation system weakness in the UK.
“It’s about the exchange of ideas, of knowledge, of building networks that will help to generate a more innovative economy. The diffusion and exchange of ideas is costly, takes time and involves people or organisations. Often it’s very difficult for individuals and very difficult for small firms. Bigger firms are much better at accessing ideas from outside their organisation than smaller firms are. We need to help develop networks that help smaller firms access ideas from other firms and also universities.”
He believes the starting point in considering a new strategy is the innovation spectrum itself and the belief that innovation is good for growth but tempered by the fact it could be harmful.
“There may be a dark side to innovations. Sometimes innovations may harm the economy in terms of being very disruptive. They may provide products and processes that have a negative impact; they may harm the quality of life.”