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May 10, 2006
EU and IPR - and what innovation is really all about
The European Union recently put out a press release about the need for strong intellectual property rights:
The European Innovation Scoreboard 2005 provides empirical evidence that a lower level of patenting to a large extent accounts for the difference in innovation performance between EU countries and to the innovation gap between Europe, the US and Japan. However, leading Member States have a patenting activity similar to US one; they register twice as much EPO patents as the US, and the US registers twice as much USPTO patents as them. The available data clearly shows that patent indicators are highly correlated to countries global innovation performance. Countries doing well in terms of innovation performance also score high in patenting.
On further investigation, this is a less than startling finding - and somewhat disingenuous. One of the major parts of the European Innovation Scoreboard is intellectual property. So, it should come as no surprise that an innovation index based in part on the level of patents is correlated with the levels of patents.
Of course, patents aren't the only dimension of innovation covered. The index is made up of 5 key dimensions:
Innovation drivers measure the structural conditions required for innovation potential, Knowledge creation measures the investments in R&D activities, Innovation & entrepreneurship measures the efforts towards innovation at the firm level, Application measures the performance expressed in terms of labour and business activities and their value added in innovative sectors, and Intellectual property measures the achieved results in terms of successful know-how.
The first three (innovation drivers, knowledge creation and innovation & entrepreneurship) are inputs while application and IP are output measures. From my point of view, it is the applications outputs that really matter. The application outputs included 5 measures: employment in high-tech services as a % of total workforce; exports of high technology products as a share of total exports; sales of new-to-market products as a % of total turnover; sales of new-to-firm not new-to-market products as a of total turnover; and , employment in medium-high and high-tech manufacturing as a % of total workforce. Of the five, three of these are focused on high-technology.
Most of the inputs are also focused on high-technology, basically the number of scientists and engineers and the level of R&D funding. The innovation & entrepreneurship dimension was somewhat boarder, including: SMEs innovating in-house as a % of all SMEs; innovative SMEs co-operating with others as a % of all SMEs; innovation expenditures as a % of total turnover; early-stage venture capital as a % of GDP; ICT expenditures as a % of GDP; and, SMEs using non-technological change as a % of all SMEs. This last one - non-technological change - finally begins to look at innovation broadly. It is swamped by all the high-tech measures, however.
In other words, the index is a measure of science and technology not innovation. Again, no surprise that is correlates with levels of patents. And the Scoreboard proves nothing about the importance of strong IPR to the innovation process.
What was most interesting in the scoreboard, however, was the correlations among the factors. The only input factor correlated with the output of "applications" was "innovation & entrepreneurship"! "Innovation drivers" was correlated with "intellectual property." To be glib about it, more scientists and engineers create more patents, while more innovative entrepreneurs create more new products.
That should not be a surprising finding, either.
Posted by Ken Jarboe at May 10, 2006 8:34 AM
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