Innovation isn't everything

6.00 pm - By NEIL SANDERSON

The United States is 90 per cent more innovative than the other OECD countries due to a rare combination of factors, but countries such as New Zealand can succeed in other ways, says an American economic forecaster.

Dr Horace "Woody" Brock, a mathematician and head of Strategic Economic Decisions, told a group of delegates at the Catching the Knowledge Wave conference this afternoon that the US enjoys an "off the wall" near monopoly on innovation, such as England experienced during the industrial revolution in the 18th century.

He said that, looking at it another way, 75 per cent of the world's economies together account for only 15 per cent of innovation - but other countries were closing the knowledge-based gap and the American lead would disappear by 2005.

Dr Brock pointed to US innovations such as the personal computer, the internet - and Viagra - and said there were four sufficient but necessary elements to the United States' remarkable record of innovation:

* A scientific and technological revolution, which in the case of the United States was based upon miniaturisation of electronics, digital logic, and more recently genomic logic.

* Market flexibility in labour, products and capital.

* Market augmenting institutions of civil society (unlike some countries that "are run by thugs, torturers and murderers").

* Optimism among entrepreneurs, investors and consumers that makes it easier for them to take chances.

He said there was room for other countries to prosper, even if they didn't enjoy the same fortunate combination of factors as the United States.

"There's absolutely no reason why you can't be excellent in certain things. You don't have to be innovative...you have to have an attitude whereby you embrace change and you want to push your costs down and be the first to do it, ahead of those guys up in Taiwan."

But he said there was a single challenge facing all countries at the start of the new century - how to pay for old people.

"It is no joke. If you want to have a happy population, you'll need 3 or 4 per cent growth forever, because the liability of 'spoiled old people' who want to retire at 55 and have their grandchildren pay for them...is a fixed liability.

"Grow the pizza so big that that's a small share and people will smile. Grow the pizza slowly, like Europe, and that becomes a huge and hopeless obligation.

"You're going to see civilisations tumble in the next few years. Some will get this right - Holland, Ireland, most of the Anglo-Saxon countries and the US can afford old people. Most others can't."

Dr Brock was speaking to a group of conference delegates developing strategies on sustainable economic strategies, which they will present at the conference conclusion tomorrow afternoon.

Similar groups are investigating the other four conference themes of Innovation and Creativity, People and Capability, Entrepreneurship, and Social Cohesion and the Knowledge Divide.

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