Some­times, less is more – key fac­tors for in­no­va­tion and a com­pet­i­tive econ­omy

A new paper of economiesu­isse out­lines the seven most im­por­tant pil­lars for a suc­cess­ful and sus­tain­able in­no­va­tion pol­icy.

Com­pet­i­tive­ness of a coun­try and in­no­v­a­tive strength go hand in hand. To strengthen a coun­try as a lo­ca­tion for in­no­va­tion, it is of cen­tral im­por­tance to in­crease its com­pet­i­tive­ness. Among the 20 coun­tries that are the world's top in­no­va­tors, 14 are also in the top 20 most com­pet­i­tive coun­tries. In this field, Switzer­land has ob­vi­ously done some things right. The Com­pet­i­tive­ness Index 2022 of the IMD World Com­pet­i­tive­ness Cen­ter ranks Switzer­land sec­ond be­hind Den­mark but ahead of Sin­ga­pore and Swe­den.

Com­pet­i­tive­ness through ex­cel­lent frame­work con­di­tions

Com­pet­i­tive­ness is best sup­ported by ex­cel­lent frame­work con­di­tions (pil­lar one). This in­cludes, for ex­am­ple, macro­eco­nomic, po­lit­i­cal, and legal sta­bil­ity, a low level of reg­u­la­tion, a low tax bur­den, ac­cess to world mar­kets and ef­fec­tive pro­tec­tion of in­tel­lec­tual prop­erty. Busi­nessEu­rope’s re­cently pre­sented ac­tion plan for more com­pet­i­tive­ness and reg­u­la­tory breath­ing space is a good way to boost in­no­va­tion and make Eu­rope again a place to in­vest and to do busi­ness.

Good ed­u­ca­tion is one of the most de­ci­sive con­di­tions for in­no­va­tion today (pil­lar two). In ad­di­tion to an ex­cel­lent ed­u­ca­tion sys­tem, Switzer­land has the ad­van­tage to rely on strong dual vo­ca­tional train­ing.

How­ever, in the age of dig­i­tal­i­sa­tion, tech­ni­cal skills and en­tre­pre­neur­ial abil­ity are par­tic­u­larly im­por­tant. Pro­mot­ing STEM sub­jects and en­tre­pre­neur­ship at an early age in school (pil­lar three) is key to in­crease the ca­pac­ity for in­no­va­tion. Here, Switzer­land must do bet­ter if it wants to stay ahead of the curve.

Gov­ern­ment in­vest­ment in ed­u­ca­tion and R&D boosts in­no­va­tion, not in­creased state aid.

Gov­ern­ment in­vest­ment in ed­u­ca­tion, re­search, and de­vel­op­ment (pil­lar four) is cen­tral to the ca­pac­ity to in­no­vate. In re­cent years, many coun­tries have in­creased their com­mit­ment to re­search and de­vel­op­ment in terms of strate­gic ori­en­ta­tion to­wards in­no­va­tion. In this area, the Eu­ro­pean Union has done a good job with Hori­zon Eu­rope, by far the largest frame­work pro­gramme for re­search and in­no­va­tion in the world. While Switzer­land is still in a good po­si­tion over­all, the growth of its R&D ex­pen­di­ture is below av­er­age in in­ter­na­tional com­par­i­son. There­fore, long term gov­ern­ment spend­ing on ed­u­ca­tion, re­search and de­vel­op­ment must be pri­or­i­tized.

In­no­va­tion can­not be re­al­ized with­out qual­i­fied staff (pil­lar five). Sim­ple ap­proval pro­ce­dures and open ac­cess to global spe­cial­ists is an im­por­tant re­quire­ment for strength­en­ing in­no­v­a­tive power.

Multi­na­tional com­pa­nies as key dri­vers for R&D in Switzer­land

In­ter­na­tional net­works and co­op­er­a­tion are other key fac­tors for in­no­va­tion and progress (pil­lar six). Multi­na­tional com­pa­nies with their in­ter­na­tional net­work and the in­ter­na­tional teams pro­vide knowl­edge ex­change across bor­ders and thus play a par­tic­u­larly im­por­tant role. A high level of in­ter­na­tion­al­ity strength­ens the in­no­v­a­tive power of a coun­try such as Switzer­land.

Last, but not least, liv­ing in­no­va­tion ecosys­tems can help SMEs and star­tups to strengthen their in­no­v­a­tive ca­pac­ity (pil­lar seven). But if the frame­work con­di­tions are bad, the value of a gov­ern­ment-sup­ported in­no­va­tion sys­tem will re­main low.

Dossier­pol­i­tics: the seven pil­lars of in­no­va­tion ca­pac­ity