Innovation activity in Australia doubles in 2010 index

IBM Australia and the Melbourne Institute of Applied Economic and Social Research, University of Melbourne, have published the fourth edition of the IBM-Melbourne Institute ‘Innovation Index of Australian Industry’ which reveals growth in innovative activity in Australia between 2007-2008.

The study revealed that following a three-year period of flat innovation growth in Australia between 2005-2007, this year’s report shows a significant rise in activity of 6.1%, compared with an average rate of increase in the period since 1990 of 3.1% per annum. This finding is of particular interest given the backdrop of the global financial crisis (GFC), which would have had some impact on the period under review.

Whereas innovation activity seems to have been slowed or affected by other economic disruptions during 1990 to 2007, this year's study shows a strong increase relative to a slowdown in economic growth (2.4% in 2008 and 1.3% in 2009).

The 2010 Innovation Index also found that Australia seems to be focused on the commercialisation of innovation, with patent intensity quadrupling in the period under review. The top five performing innovation industries in 2008 were: cultural and recreational services; personal/other services; retail; communications; wholesale trade.

The study also found a strong correlation between the top performing innovation sectors and those industries that were strong ICT innovators, in particular: communications; retail; wholesale trade; finance; and utilities.

“It’s extremely encouraging to see Australia continuing to invest significantly in innovation even at the outset of a massive economic disruption like the GFC,” said Glenn Wightwick, Chief Technologist, IBM Australia. “It’s also clear from the study that ICT is a key innovation enabler. As we move into the next phase of Australia’s growth, underpinned by smart systems and a ubiquitous broadband network, we expect innovation growth to continue despite any continuing GFC lag in the next study.”

Commenting on the backdrop of the GFC on this year’s study, Associate Professor Paul Jensen, Senior Research Fellow, Melbourne Institute of Applied Economic and Social Research, said: “Economic growth in Australia slowed to 2.4% in calendar year 2008 from 4.7% the previous year as the effects of the GFC started to be felt.

Most of the growth in the Innovation Index in 2008 was due to an increase in patent, design and R&D intensity, as well as the increase in the organisational/managerial component. This seems to indicate that business confidence from government announcements about pro-innovation policy development, coupled with longer term microeconomic reform, allowed Australian businesses to continue implementing innovation-related policies, even during a period of economic uncertainty.”

The Innovation Index of Australian Industry was conceived by IBM Australia and prepared by researchers at the Melbourne Institute to fill a gap in innovation research. Although innovation is widely accepted as a key driver of productivity, until the index, there had not been a published study in Australia that measured the many different aspects in which local industries innovate in their provision of products and services. The index is still the only study to reflect the complex nature of innovation via an inter-industry, multi-indicator analysis approach. This is achieved by addressing the many contributors to industry innovation with the analysis of six key data groups, comprising: research and development intensity; patent intensity; trade mark intensity; design intensity; organisational/managerial transformation; and productivity.