OECD Innovation Report Urges Governments To Stop Policies Unduly Favouring Incumbents

By Marianna Drake for Intellectual Property Watch

An Organisation for Economic Cooperation and Development (OECD) report released today sets out principles governments can adopt to boost innovation, thereby increasing productivity and economic growth.

The report, entitled, “The Innovation Imperative: Contributing to Productivity, Growth and Well-Being,” is available here.

The report notes that young firms generate many of the breakthrough technologies driving innovation, as well as accounting for more than 40 percent of new jobs in OECD economies.

The digital revolution enables these young firms to develop fundamentally new, and often disruptive, business models, such as the sharing economy. According to the OECD, it “is more urgent than ever to give young firms the means to experiment with new technologies and ways of doing business.”

However, the report demonstrates that many policies, from tax credits to environmental regulations, favour incumbents over new firms, thereby reducing the growth of new firms and delaying the exit of less productive businesses.

The report calls on policymakers to take a long-term approach and look to the benefits of funding lengthy research projects that may help solve challenges like climate change. Furthermore, it urges them to provide more competitive and transparent grants for young firms, rather than tax incentives that don’t meet their needs. Finally, it compels them to monitor and evaluate their innovation policies in order to learn from experience and adjust them over time.

Marianna Drake is an intern at Intellectual Property Watch and DiploFoundation. She has an LLB Honours in Law from King’s College London where she developed an interest in information technology law, Internet governance and Internet related intellectual property issues.