Innovation and Environmental Policies for Sustainable Development

1
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
3
Introduction

• Key issues concerning innovation policy,
  environmental policy and sustainable development

4
Introduction

• Key issues concerning innovation policy,
  environmental policy and sustainable development
• What can innovation policy do for sustainable
  development?

5
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?

6
Policy Spheres
Environmental Policy
Industrial Policy
Innovation Policy for Sustainable Development
Innovation Policy
Sustainable Development Policy
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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, dont 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, dont 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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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
• ST 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
• ST 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. RD 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. RD 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 RD
• 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 RD
• 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 RD
  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 RD
  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