{"id":35724,"date":"2017-01-26T10:00:45","date_gmt":"2017-01-26T10:00:45","guid":{"rendered":"http:\/\/www.enterpriseresearch.ac.uk\/?p=35724"},"modified":"2020-07-01T11:21:11","modified_gmt":"2020-07-01T10:21:11","slug":"innovation-policy-driving-equity-driving-inequality","status":"publish","type":"post","link":"https:\/\/www.enterpriseresearch.ac.uk\/innovation-policy-driving-equity-driving-inequality\/","title":{"rendered":"Innovation policy: Driving equity or driving inequality?"},"content":{"rendered":"
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Innovation policy: Driving equity or driving inequality?<\/strong><\/p>\n

The need to boost levels of innovation in the UK is at the heart of the recent Green Paper on Industrial Strategy<\/a>, and few would argue with the general proposition that innovation is good for growth. New products, new services and new ways of doing business help firms to win new customers and sell more both in the UK and internationally.<\/p>\n

However, innovation can also have strong labour market effects which may not be so desirable. Innovation in modern production processes can lead to a loss of semi-skilled or unskilled jobs. More complex products and services may also increase the demand for employees with strong ICT skills at the expense of the less skilled. As Bent Brynjlofsson and Andrew McAfee argue in the \u2018Second Machine Age\u2019, both mechanisms mean that accelerated innovation can lead to greater inequality in opportunity and earnings, a trend which may be exacerbated by public policies which promote innovation.<\/p>\n

The way public support for innovation is allocated may also exacerbate inequalities in competitiveness between firms. Public support for innovation awarded through competitions or challenges tends to reward the best projects and the best companies. Our own recent research<\/a> suggests that this leads to some leading-edge firms attracting a disproportionate share of public support for innovation. Success breeds success in this respect with the potential to increase the gap in competitiveness between the winners and losers in these Challenges. Recent OECD research<\/a> has also made a similar point, emphasising the growing gap between high productivity, leading edge companies, and less innovative low productivity firms.<\/p>\n

So, innovation may promote growth and productivity but it can also drive inequality both in job opportunities and competitiveness. But does it have to work like this?<\/p>\n

Some recent research by Amos Zehavi and Dan Breznitz<\/a> (February 2017, Research Policy) provides an alternative perspective describing what they call \u2018Distribution sensitive innovation policies\u2019 or DSIPs. The objective here is to target innovation policy measures to actively reduce inequalities and at the same time stimulate advances in growth and\/or productivity. In their research they describe four very different DSIPs adopted in Israel and intended to counter either inequalities in competitiveness (between sectors or locations) or directly address inequality of opportunity:<\/p>\n