Amidst all the rhetoric about competitiveness, productivity and the Australian economy there is a sobering fact which puts many of the banal nostrums in the debate into some context.

While the Australian economy is ranked the 12^th or 13^th largest economy in the world according to nominal GDP, and 17^th according to GDP as measured by purchasing power parity, we rank a lowly 19^th in terms of our innovation. Now while business bods are constantly talking about tax, industrial relations, regulation and working harder there’s not so much talk about innovation. Indeed, much of Australia’s recent economic performance has been due to our skill at finding and digging stuff up (more commonly called luck in most places) rather than innovation.

The lowly innovation ranking comes from the Global Innovation Index 2013 (GII). It aims to capture elements of the national economy that enable innovative activities: institutions, human capital and research, infrastructure, market sophistication, business sophistication, knowledge and technology outputs and creative outputs. The latest results can be found at http://www.globalinnovationindex.org/content.aspx?page=GII-Home

Okay, you might say, 19^th in the world is not bad. But the problem is that if we want to continue to grow and prosper we ought to doing better at innovation than our overall economic ranking. If we are doing better – when you look at the list of factors the Index measures – we will be more competitive and productive. Unfortunately most of the list gets left out of most of the business and political rhetoric. Indeed, it is rare for business leaders to concede the bleeding obvious that the quality of business management is also a very major factor in national competitiveness and productivity. It is just assumed that the quality is outstanding even though that is transparently false. Of course admitting that the quality is not that great would undermine the arguments for ‘globally competitive salaries’ totalling millions of dollars.

A few people, however, think a lot about innovation. One of them, Stuart Cunningham, has published Hidden Innovation: Policy, industry and the creative sector. Another of them, Dr Andrew Leigh a Canberra ALP MHR, has recently reviewed Cunningham’s book in Australian Book Review (July-August 2013). Cunningham focusses on links between creativity and innovation in creating the jobs of the future, for example Leigh says, “As technology improves one of the worst places to be is in a job where you’re doing a task that a computer program can substitute for. One of the best places to be in a job is where your skills complement what a computer can do.” Cunningham also addresses the two cultures problem and highlights the disconnect between scientists and creative people in Australian policy formulation. Yet Leigh points out that both science and the creative arts are on the outer in the Australian Parliament. He cites a recent lobbying campaign by Australian scientists which gave every Australian parliamentarian a copy of Mark Henderson’s The Geek Manifesto: Why Science Matters. Among points Henderson makes is that politicians know less about thermodynamics than they do about Shakespeare although it is the blog’s experience that the knowledge of either among MPs is not great. Leigh also stresses, as Cunningham does, that creative industries are not just good for GDP. “Standard economics recognises that a Carl Vine piano concerto or a new novel by Tim Winton has a benefit that goes well beyond the price of the concert tickets or book purchases,” Leigh writes.

Sadly Dr Leigh has lost his Parliamentary Secretary’s position in the Rudd reshuffle. As a Gillard supporter he offered his resignation, with the proviso that he would serve if asked, but the resignation, not the offer, was accepted. But if blog readers want to see the contribution Leigh could be making they should read either of his books, Disconnected about social capital in Australia, or his new book Battlers and Billionaires: The State of Equality in Australia. Equally sadly much Australian policies on creativity are not driven by standard economics but by a narrower focus on ‘creative industries.”

Corrupt/extremely corrupt: The blog has been puzzling the survey findings (see the last blog post) on how Australians perceive levels of corruption in various institutions. One explanation proffered by a friend – which should have occurred to the blog – is that the survey questions about corruption were treated as a proxy for trustworthiness. This is plausible, particularly as the survey asked questions about whether respondents had paid a bribe or not after the other corruption questions rather than before, thereby avoiding any priming effects. And speaking of friends the blog is grateful to John Spitzer for drawing the 2013 Innovation Index to his attention.