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Innovation and Environmental Policies for Sustainable Development

Ken Guy Wise Guys Ltd. Six Countries Programme Conference Brussels February 28 - March 1, 2002

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Introduction

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Introduction

Key issues concerning innovation policy, environmental policy and sustainable development

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Introduction

Key issues concerning innovation policy, environmental policy and sustainable development

What can innovation policy do for sustainable development?

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Introduction

Key issues concerning innovation policy, environmental policy and sustainable development

What can innovation policy do for sustainable development?

What can environmental policy do for innovation?

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Policy Spheres

Industrial PolicyEnvironmental Policy

Sustainable Development Policy

Innovation Policy

Innovation Policy for Sustainable Development

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Definitions

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Definitions

The aim of industrial policy is to promote economic ‘well-being’

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Definitions

The aim of industrial policy is to promote economic ‘well-being’

The aim of environmental policy is to promote environmental ‘well-being’

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Definitions

The aim of industrial policy is to promote economic ‘well-being’

The aim of environmental policy is to promote environmental ‘well-being’

The aim of sustainable development is to maximise environmental productivity and efficiency within economic production processes

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Definitions

The aim of industrial policy is to promote economic ‘well-being’

The aim of environmental policy is to promote environmental ‘well-being’

The aim of sustainable development is to maximise environmental productivity and efficiency within economic production processes

The aim of innovation policy is to encourage changes in the amount, rate and direction of innovation - but only if externalities apply

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Innovation Policy

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Innovation Policy

From additionality and competitiveness to broader socio-economic goals

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Innovation Policy

From additionality and competitiveness to broader socio-economic goals

But has innovation policy worked?

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Innovation Policy

From additionality and competitiveness to broader socio-economic goals

But has innovation policy worked? ‘Yes’ at one level, ‘don’t know’ at another

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Innovation Policy

From additionality and competitiveness to broader socio-economic goals

But has innovation policy worked? ‘Yes’ at one level, ‘don’t know’ at another But our increased understanding of how

innovation systems work provides us with a few a policy tips

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Policy Tips

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Policy Tips

Policy intervention should target the weakest links

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Policy Tips

Policy intervention should target the weakest links Individual policy instruments are unlikely to have

a dramatic impact on system performance

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Policy Tips

Policy intervention should target the weakest links Individual policy instruments are unlikely to have

a dramatic impact on system performance Hence the need for a broad policy mix

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Policy Tips

Policy intervention should target the weakest links Individual policy instruments are unlikely to have

a dramatic impact on system performance Hence the need for a broad policy mix And a system of ‘strategic intelligence’ to help

formulate the mix

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Publ ic Sector Pri vate Sector

Knowle dgeUsers

Universities

S&T Training andEducation

Intermediate and EndConsumers

Market for Goods andServices

Knowle dgeCreators

Universities

Basic ScientificResearch

Firms

Applied R&D andProduct/Process

Development

A Simple Innovation System

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More Tips

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More Tips

All parts need to interact well if the system is to function smoothly

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More Tips

All parts need to interact well if the system is to function smoothly

Stimulating ‘knowledge creation’ in the private sector is vital but difficult

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More Tips

All parts need to interact well if the system is to function smoothly

Stimulating ‘knowledge creation’ in the private sector is vital but difficult

S&T education and training is needed to improve social capital and absorptive capacity

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More Tips

All parts need to interact well if the system is to function smoothly

Stimulating ‘knowledge creation’ in the private sector is vital but difficult

S&T education and training is needed to improve social capital and absorptive capacity

Linking or ‘bridging’ strategies have become increasingly important

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A Simple Policy Classification Scheme

Public Sector Private Sector

Knowledge Users

Knowledge

Creators

Reinforcement Policies

Bridging Policies

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Summary of Simple Tips

Base policy prescriptions on strategic analysis of weak nodes in innovation systems

Tackle these weaknesses via broad policy mixes Include measures which strengthen human

resources Include bridging measures aimed at improving

knowledge and information flows Experiment, evaluate and feed back ‘strategic

intelligence’

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Environmental Policy

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Environmental Policy

Focus on the interaction with technology development, innovation and economic well-being

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Environmental Policy

Focus on the interaction with technology development, innovation and economic well-being

Evidence that regulatory change can stimulate relevant technological change - though change is often incremental and slow

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Environmental Policy

Focus on the interaction with technology development, innovation and economic well-being

Evidence that regulatory change can stimulate relevant technological change - though change is often incremental and slow

Many traditional instruments also successful, e.g. R&D programmes, though under-critical and too short-term

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Environmental Policy

Focus on the interaction with technology development, innovation and economic well-being

Evidence that regulatory change can stimulate relevant technological change - though change is often incremental and slow

Many traditional instruments also successful, e.g. R&D programmes, though under-critical and too short-term

But high barriers to innovation in many environment-related areas

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What Can Innovation Policy Do for Sustainable Development?

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What Can Innovation Policy Do for Sustainable Development?

Apply a broad policy mix

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What Can Innovation Policy Do for Sustainable Development?

Apply a broad policy mix UK study recommended a mix which included:

Target setting Financial support

Support for environmental R&D Support for the training of researchers Prizes for innovations which reach environmental objectives Tax incentives for environment-friendly innovations A National Environment facility to manage and channel

environmental innovation Political and corporate leadership and clear statements of intent

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What Can Innovation Policy Do for Sustainable Development?

Apply a broad policy mix UK study recommended a mix which included:

Target setting Financial support

Support for environmental R&D Support for the training of researchers Prizes for innovations which reach environmental objectives Tax incentives for environment-friendly innovations A National Environment facility to manage and channel

environmental innovation Political and corporate leadership and clear statements of intent

Combat uncertainty and ignorance about ‘correct’ policy prescriptions with experimentation and evaluation

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What Can Environmental Policy Do for Innovation?

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What Can Environmental Policy Do for Innovation?

Much current innovation policy is geared to improving the quality of stocks and flows within innovation systems

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What Can Environmental Policy Do for Innovation?

Much current innovation policy is geared to improving the quality of stocks and flows within innovation systems

But there is still scope for quantity measures, especially in terms of stimulating R&D expenditure in the private sector

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What Can Environmental Policy Do for Innovation?

Much current innovation policy is geared to improving the quality of stocks and flows within innovation systems

But there is still scope for quantity measures, especially in terms of stimulating R&D expenditure in the private sector

Combining regulatory measures with traditional innovation policy instruments could overcome inertia in areas where environmental and profit motives will eventually coincide