The National Dialogue on Entrepreneurship reports on two new studies that highlight innovation in Asia and Europe.
A new World Bank study examines the state of innovation in East Asia with a focus on three primary sources of knowledge flow into the region: international trade, acquisition of disembodied knowledge, and foreign direct investment. East Asian economies still rely heavily on knowledge flows from Japan and the US, but the region's economies are beginning to build their own home-based knowledge industries as well. Patenting activity is growing in the region, especially in Taiwan, Korea, Hong Kong, and Singapore. Not surprisingly, electronics, computers, and communications are areas of particular strength. Other nations, such as Thailand, Indonesia, and Malaysia, continue to lag behind these regional leaders. When seeking to explain these patterns, the authors point to several factors. Regional innovation leaders tend to have more open local economies, better local education systems, and more effective government supports for innovation policy.
Let us hope that by the phrase "more effective government supports" the authors are referring to what has proven to be the most effective government support for entrepreneurship -- bureaucrats and politicians getting out of the way of entrepreneurs and letting free markets work. Central planning efforts where government agencies try to pick winners and losers have never proven to be a wise long-term strategy.
NDE also reports on a new Information Technology and Innovation Policy Foundation report:
[F]uture European prosperity depends upon Europe's ability to more effectively deploy information and communications technologies (ICT). The study notes that European productivity growth rates have lagged in recent years, and it identifies lagging use of ICT (especially in service sectors) as one culprit in the process. Like the US, Europe needs to boost productivity rates. But the pressures in Europe are even stronger, due to a more rapidly aging population. How can Europe reverse these trends? The report's author, Rob Atkinson, recommends greater overall private investment in ICT, the creation of public incentives to support such investment, and expanded efforts to promote digital literacy and adoption among the general population of European countries.
The most effective means of encouraging private investment is making favorable policy decision for an entrepreneurial economy. Lower taxes, less regulation, and stronger property rights are all key elements. I am afraid that most of Europe has a very long way to go on all three of these critical issues of public policy.
