OECD - World Bank Joint Conference on Innovation and Sustainable Growth in the Globalised Economy

Remarks by Angel Gurría, OECD Secretary-General

18 November 2008 , Paris

Mr. Vice President Leipziger, Excellencies, Ladies and Gentlemen, good morning.

It is gratifying for both of our organisations, the OECD and the World Bank, to see so many distinguished specialist of innovation issues around the table today, in particular those from countries outside the OECD area.

In this respect this conference is particularly timely. Its overall objective is to discuss how the OECD and the World Bank can push for a joint agenda for innovation and growth in the global economy, beyond the current crisis. For us it is an important undertaking that will enrich the OECD Innovation Strategy.
We face three main challenges:

First, how can one promote innovation as an important issue, even in times like these?

Second, how can one underline that it is important to promote innovation in countries at different stages of development, even in times like these?

Third, how can we put into effect a partnership between the World Bank and the OECD, on the subject of innovation for growth, in times like these?

Over the next two days you will address these issues. However, let me make a few observations:
The way we a look at innovation is changing dramatically. Much of the public discussion on “competitiveness” is often reduced to country rankings of one-dimensional variables, such as R&D per GDP or patent counts per population. This innovation policy discussions tend to have a “mercantilist” bent.

Countries try to attract R&D centres, export high-technology goods and compete for talented migrants, but who is supposed to promote a multilateral framework within which national innovation policies can be pursued by our interdependent economies? We know from the OECD’s nearly 50 year long experience that we cannot all simultaneously promote exports and reduce imports.

Open innovation, both in the sense of flows of knowledge between firms as well as global networks across frontiers, is playing an increasingly important role in driving growth. There are numerous positive-sum gains to be reaped from mobility and openness. Cooperation and competition in knowledge creation complement each other.

To have globally compatible innovation policies we need to forge common understandings. Openness may not always be perceived as a panacea for innovation and growth. There are genuine concerns, for instance, around the issue of brain drain/brain circulation. There are significant differences of opinion on intellectual property protection and on the effects of new practices for IP protection, especially on lower income economies. Some of these have contributed to stalling the Doha Development Agenda.

Innovation has become key to growth in the emerging economies which are the focus of our discussion today. They account for a growing share of innovative effort. Our recent surveys show that non-OECD countries accounted for 40 percent of global R&D between 2001 and 2006, which is almost double their share in the previous period.

Developing or emerging economies also reap benefits from new technologies in novel ways. In this respect information and communications technologies (ICTs) provide a particularly illustrative angle into how the innovation landscape is changing. Liberalisation in communications has created an enabling environment to access innovation for developing countries. Location of innovation and take-up of ICTs around the world is no longer predictable and is increasingly user driven. There are potentially profound development effects from increasing access to ICTs - such as turning every mobile phone into an internet terminal or an ATM for people without bank accounts. You will discuss these developments in more detail in Session 4.

Unsurprisingly, in recent years both the Bank and the OECD have stepped up efforts to understand the contribution of innovation to growth in middle- or lower-Income economies. On our side, as will be seen in Session 3, we have had the benefit of studying innovation in economies at widely different levels of development, from China to Switzerland, from South Africa to Chile. Our preliminary findings indicate that the old notion of catching up by imitation has increasingly limited value in the global economy.

Increasing emphasis on innovation in middle income economies also ties well with another one of our key priorities here in the OECD, which we call Enhanced Engagement. This is a fundamental proposal by the OECD Member countries to forge a more structured and coherent partnership with five major economies, namely, Brazil, China, India, Indonesia and South Africa across a range of policy areas.

Enhanced Engagement should have a strong innovation policy component, as many of these partner economies are already significant participants in the relevant OECD committees and studies.

The World Bank and the OECD are both addressing global issues. While the World Bank was born with Universal Membership, a growing Membership of developing and emerging economies are closely and formally associated with the OECD through their membership in our Development Centre. These include Argentina, Brazil, Chile, Colombia, Egypt, India, Israel, Romania, South Africa and Vietnam. Indonesia has recently applied to join the Centre. Indeed, through our outreach initiatives of various types we now work with more than one hundred countries

This conference is an important step in our collaboration and will provide very valuable inputs on how to shape the next steps. The global policy community is vigorously engaged  in an action to fight the crisis, so that it will be possible to create a new framework of open sustainable and knowledge drive growth. The challenge is to identify concrete ways for this to happen and design the appropriate blend of general policy recommendation and country specific aspects.

The G20 communiqué over the weekend underlines that dealing with the economic crisis requires a strong transparent financial architecture and a strategy to restore growth. Both these targets have to be achieved by involving the major industrial and emerging economies in a coordinated effort. International organisations must also work closely together to help achieve these goals.

At the OECD we have developed a contribution to the G20 Action Plan which lays out proposals related to both the regulatory domain and the strategies to enhance long term sustainable growth with innovation as a main driver of growth in all countries.

Thank you.