Why on earth are economists driving the innovation policy debate?

Published 27 August 2013 11:01, Updated 30 August 2013 17:11

+font -font print
Why on earth are economists driving the innovation policy debate?

Biotech entrepreneur Chris Behrenbruch says Australian competitiveness is ripe for reform. Photo: Luis Ascui

I recently read Joshua Gans’s “moral case for innovation” where he laments that an economic case can’t be made for innovation in Australia.

It made me want to crack open the whisky bottle in commiseration. It’s not just that I’m weary of listening to brilliant but misguided people like the Grattan Institute’s John Daley harp on about the fact Australia couldn’t possibly have an innovation-led economy because we are too busy digging stuff out of the ground, are too far from major markets (really?) and rely too much on “purchased” innovation from abroad.

It’s not just that it’s tiring to see “innovation” thrown in as an adjunct term to “job creation” in election propaganda. It’s not just because unions see Ford’s departure as the death of Australian manufacturing.

It’s because the innovation debate is led by economists, and economists don’t know much about innovation. Evidence of this is their creation of wishy-washy new disciplines such as ‘innovation economics’ to account for human capital beside more traditional notions of capital and resource utilisation. In other words, the economists had to start to factor in dreaded externalities, or they didn’t have anything useful to say.

Contrary to Gans’s assertions (and at the risk of sounding a bit neoclassical), I think economists can contribute to fundamental policy arenas that can help to create the right ecosystem for innovation to prosper.

Australia’s competitiveness is ripe for reform.

The biggest challenge for innovation in Australia is cultural, and not grounded in economics. We don’t want it badly enough because we’re not generally poor and there’s little sense of nation building. The “tall poppy” syndrome is alive and well and there is limited culture of risk-taking. We don’t value education. We don’t identify with the major markets on our doorstep. But to top it off, leading the dialogue we’ve got dyed-in-the-wool economists who make their careers thinking about “resource rents”.

We’ve bored innovation into submission. If we want a new generation of entrepreneurs, let’s start with a glass half-full view of what our superb country offers.

Chris Behrenbruch is a biotech entrepreneur who splits his time between Los Angeles, Singapore and Melbourne.

Topics:

Comments