Developing Economies

Issues relating to IT and innovation for development or in developing countries.

The Impact of Cloud Computing on Developing Economies

November 8, 2012
A panel discussion with Peter Cowhey on the growth of cloud computing, its impact on developing economies, and the policies that governments should pursue to realize the benefits of cloud computing.

While there has been much discussion about the impact of cloud computing in developed countries, there has been little research on the impact that this will have on developing countries. In a new report, Peter F. Cowhey and Michael Kleeman (University of California San Diego) take an in-depth look at the impact that cloud computing will have on India, Mexico and South Africa given their respective policies, technologies, and resources. Read more »

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Today there are 220 million mobile subscriptions in Indonesia.

According to a new report from McKinsey Global Institute, in the next ten years Indonesia will be a major mobile and digital nation. Today there are 220 million mobile subscriptions in Indonesia. Despite the challenges the economy is facing, it is evident that the Internet and related technologies are becoming a central staple of this emerging economy. It's important the United States recognize the power Indonesia will have as the next emerging digital nation.

The Global Innovation Policy Index

March 8, 2012 - 9:00am - 10:30am
Information Technology and Innovation Foundation
1101 K Street NW
Suite 610A
Washington
DC
20005

Countries worldwide are engaged in a fierce race for global innovation advantage. Read more »

Global Innovation Policy Index

March 8, 2012
| Reports

ITIF thanks the Kauffman Foundation for making this report possible.

The last decade has seen an increasing realization among economists and policymakers that innovation has become the central economic growth driver and a key to improved standards of living. This awakening to the importance of innovation-based economic growth has spawned a fierce race for global innovation advantage among countries. To advance their competitiveness in this race, many countries are implementing thoughtful and constructive innovation policies aimed at boosting their use of information and communications technologies, helping their companies become more productive and innovative, and facilitating the creation of new companies that produce high-value-added products and services. However, some countries have put in place policies that try to win the race by distorting the global innovation system at the expense of other nations. Hence, a framework is required to identify and promote the deployment of effective innovation policies that drive domestic economic growth while ensuring a sustainable innovation ecosystem that benefits all countries throughout the world. Effective innovation policy relies on more than just science policy and the promotion of high-tech product development. It also must focus on improving productivity across the board in all economic sectors. Countries with the best innovation strategies coordinate their policies toward skills, scientific research, information and communications technologies (ICTs), tax, trade, intellectual property, government procurement, standards, and regulations in an integrated approach designed to drive economic growth through innovation. Nations are unlikely to achieve sustainably high rates of innovation if their governments have not put in place a broad range of innovation-enabling policies that create the conditions in which organizations throughout a country—whether private enterprises, government agencies, or nonprofit entities—can successfully innovate. To help them do so, this report provides a structured assessment of policies informing the innovation capacity of fifty-five countries. Moreover, it highlights the most effective policies countries are using to build their innovation capacity, and describes how countries can learn from one another in deploying the best policies. The fifty-five countries analyzed in this report include all members of the Organisation for Economic Co-operation and Development (OECD), all European Union (EU) member states, and nineteen of the twenty-one Asia-Pacific Economic Cooperation (APEC) member economies, as well as the large developing nations of Argentina, Brazil, India, and South Africa. According to the income classification system of the World Bank, thirty-six of the fifty-five countries are “high income,” fifteen are “upper-middle income,” and four—India, Indonesia, the Philippines, and Vietnam—are “lower-middle income.” Due to a lack of available data, no “low-income” countries are included in the analysis.

The report assesses these countries on their strength in seven core policy areas:

  1. Open and non-discriminatory market access and foreign direct investment policies;
  2. Science and R&D policies that spur innovation;
  3. Openness to domestic competition and new firm entry;
  4. Effective intellectual property rights protection policies;
  5. Digital policies enabling the robust deployment of ICT platforms;
  6. Open and transparent government procurement policies; and
  7. Openness to high-skill immigration.

Countries are ranked as upper tier, upper-mid tier, lower-mid tier, or lower tier on each of these seven indices, with those ranks calculated by countries’ performance on an array of key sub-indicators relevant to each core policy area. In total, the study assesses eighty-four sub-indicators across the seven core innovation policy areas. The seven areas then are weighted as follows: trade, science and R&D, and digital policies at 17.5 percent of the overall weight each; intellectual property protection and domestic competition at 15 percent each; government procurement at 10 percent; and high-skill immigration at 7.5 percent. Countries’ ranks on the seven weighted core innovation policy areas then are aggregated to produce an overall ranking reflecting the strength of their innovation policy capacity. 

To maximize global innovation, countries need to implement their policies with regard to trade, science and R&D, ICT, intellectual property rights, domestic market competition, government procurement, and high-skill immigration in ways that maximize their innovation capacity but without distorting global trade. To accomplish this, countries’ policies will have to be predicated on transparent, non-discriminatory, market-based principles that embrace both global standards and the free flow of talent, capital, information, products, services, and technologies. The following provides a brief summary of the key points in each of the seven core innovation policy areas.

GIPI Rankings

Trade: As innovation and trade policy have become increasingly intertwined, openness to trade characterized by open market access and receptivity to foreign direct investment has become a bedrock pillar of a country’s innovation capacity:

  • Free trade benefits all countries by allowing each to specialize in producing the products or services in which they have a comparative or competitive advantage.
  • Countries should not specialize in all technologies and industries; rather, trade enables them to specialize in what they are good at and then trade for the rest.
  • A vital component of free trade is openness to both inward and outward foreign direct investment.
  • Another critical component is the use of voluntary, market-led, global standards.

Science and R&D: Science and R&D policies boost countries’ innovation potential while enhancing their ability to benefit from technology-based innovation:

  • Developed nations should focus on implementing science and R&D policies that increase the supply of ideas, knowledge, and technology in their economies and then incentivize their commercialization.
  • Developing nations should focus more on implementing science and R&D policies that enable their organizations to adopt newer and better technologies.
  • Countries should utilize a diverse portfolio of science and R&D tools, targeting strategic and broad technologies and industries at all stages of their development.
  • Technology and R&D policies should be coordinated by a National Innovation Foundation to take advantage of inherent synergies between policies.
  • Science and R&D policies should not discriminate against foreign firms operating domestically.

Domestic Competition: Vibrant domestic markets supported by a sound and rules-based regulatory environment that allows both existing and new firms (whether domestic- or foreign-owned) to compete on a level playing field remain a lynchpin of prosperity:

  • Competitive marketplaces are one of the strongest drivers of innovation and productivity growth.
  • Countries should remove onerous regulatory restrictions, incumbent protections, cross-border trade restrictions, and labor market restrictions that inhibit competition.
  • Leading countries feature regulatory systems that are transparent and non-discriminatory, provide due process, and include opportunities for the meaningful engagement of all stakeholders.
  • Countries should create an environment that fosters entrepreneurship throughout all sectors of the economy.

IPR: Recognition of intellectual property rights (IPR) is a vital element if global trade and foreign direct investment are to thrive:

  • Effective protection and enforcement of IPR encourages innovators to invest in research, development, and the commercialization of technologies while promoting their dissemination.
  • Weak intellectual property rights protections reduce the flow of foreign direct investment and technology transfer.
  • Without adequate intellectual property protections, there will be less innovation overall, and this hurts all countries.
  • IPR reform tends to deliver positive economic results regardless of a country’s level of development.

Digital Policies: Information and communications technology is the global economy’s strongest enabler of productivity and innovation:

  • Effective digital policies focus first and foremost on spurring ICT use throughout the economy.
  • The vast majority of benefits from ICT come from the widespread use of ICT in all sectors as opposed to its production.
  • Leading countries recognize that the greatest opportunity to improve their economic growth lies in increasing the productivity of their domestic sectors, particularly through the application of ICT.

Government Procurement: Because government procurement accounts for such a large share of economic activity in most countries, government procurement policy is an important and legitimate component of countries’ innovation strategies:

  • Governments should orient their procurement policies to become strong drivers of innovation.
  • Government purchases should be made on the basis of the best value for government, not on the basis of national preferences.
  • Government procurement policies should be transparent, non-discriminatory, openly competitive, and performance-based.
  • Countries should refrain from adopting measures that make the location of the development or ownership of intellectual property, or any requirement to license intellectual property to a domestic entity, a condition for government procurement eligibility.

High-Skill Immigration: Talent has become the world’s most sought-after commodity. Thus, having a highly skilled talent pool to draw from has become vital to countries’ economic well-being:

  • High-skill immigrants play a critical role in bringing skills, talent, and knowledge to societies while contributing to new firm development, employment, and economic growth.
  • Immigration policies play an important part in contributing to a country’s knowledge pool and creative ability by bringing in new perspectives and needed skills and knowledge.

The Global Innovation Policy Index

March 8, 2012
Release of a new report that benchmarks the competitiveness of the innovation and trade policies of 55 nations.

The Global Innovation Policy Index, produced by ITIF in conjunction with the Ewing Marion Kauffman Foundation, assesses the effectiveness of the innovation policies of 55 countries using 84 indicators grouped into seven core innovation policy areas: 1) trade and foreign direct investment; 2) science and R&D; 3) domestic market competition; 4) intellectual property rights; 5) information and communications technology; 6) government procurement; and 7) high-skill immigration. Read more »

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UN Conference on Sustainable Mobility

December 6, 2011
| Presentations

On December 6, 2011, Senior Analyst Stephen Ezell willl participate in the Urban Mobility India Conference and Exhibition & Sixth Regional Environmentally Sustainable Transport Forum in New Delhi, India. His presentation titled "Three pillars for ITS Development: National Vision, Investment, Strong Government Leadership" will focus on the importance of ITS for developing economies. 

APEC economies now represent approximately 54 percent of world GDP and 44 percent of world trade.

Economically, the Asia Pacific region is a vibrant and complex place. The policies of individual countries and their relationships with one another will have a huge influence on the United States' economic future and impact the entire globe. Within the 21-member Asia Pacific Economic Cooperation bloc, innovation policies vary. It is critical to encourage the widespread adoption of pro-growth policies and respect for the rules-based trading system within APEC.

Innovation, Trade, and Technology Policies in Asia-Pacific Economies: A Scorecard

December 5, 2011
| Reports
The report is a comprehensive and unprecedented survey of the innovation policies of the 21 Asia Pacific Economic Cooperation economies. It identifies best practices used by these economies to spur innovation-based economic growth using 73 innovation policy indicators in six categories: 1) Open and non-discriminatory trade, market access, foreign direct investment, and standards policies; 2) Science and research and development (R&D) policies that spur innovation; 3) Digital policies that enable robust deployment of information and communications technology (ICT) platforms that support a broad range of digital applications; 4) Intellectual property rights (IPR) protection policies; 5) Robustness of domestic competition and new firm entry; 6) Open and transparent government procurement policies, ranks them on the quality of their innovation policies. Undertaken at the request of the Office of the U.S. Trade Representative and with assistance from U.S. Agency for International Development, the report not only serves as a policy scorecard but also allows APEC economies to compare themselves to their trading partners and to identify their strengths, weaknesses, and opportunities to improve their innovation policies to spur growth and competitiveness.

The global economy—and trade among its members—is evolving rapidly. Many economies are seeking to drive economic growth through innovation, including boosting the use of information and communications technologies among all organizations, helping companies become more productive and innovative, and enabling the creation of new companies producing high-value-added products and services. Driving this shift has been the realization by a growing number of economists that it is innovation—the improvement or creation of products, processes, services, and business or organizational models—more than the accumulation of savings or capital that has become the central driver of economic growth and the key to improving standards of living. Yet the growing awareness of innovation’s key role in national economic well-being and competitiveness has spawned a race for global innovation advantage. As economies seek to realize the highest levels of innovation-based economic growth, they will need to design their policies with regard to trade, technology, competition, intellectual property rights, procurement, and even taxes and education in optimal ways to bolster their innovation capacity. But as innovation becomes the focal point of economic growth, economies will also have to implement their innovation-supporting policies in a manner that does not distort global trade. Accordingly, the rules governing the international trading system will also have to evolve, so that trade in innovative products and services is as unrestricted as trade in manufactured goods. This will require maintaining a focus on removing quantifiable trade barriers, such as tariffs, but complementing that approach by vigilantly removing non-tariff and technical barriers to trade while eschewing the erection of new barriers. The reality is that trade policy and innovation policy have come together to the point where now they are intimately intertwined: it’s impossible to make trade policy without an understanding of innovation policy, and it’s likewise impossible to craft innovation policy without an understanding of trade policy. Fundamentally, this is because innovation—both its production and consumption—has become globalized, for three reasons.

First, a non-globalized innovation system is a sub-optimal one. Open markets lead to an increase in the size of the marketplace and allow innovative firms to realize economies of scale, thus enabling them to reinvest earnings into the next generation of innovative products, engendering a virtuous cycle of innovation. This is especially important for industries with relatively high fixed costs but low marginal costs of production (such as semiconductors, software, video games, movies and music, pharmaceuticals, biotechnological products, etc.) since larger markets can be served with overall declining average costs. Second, by exposing domestic firms to globalized competition, trade acts as a strong driver of innovation and productivity growth. Indeed, exposure to international markets has been shown to have a strong positive effect on both enterprises’ incentives—and ability—to innovate. Finally, there is a learning effect from innovation. The more that innovative businesses and individuals in all economies are exposed to the new challenges, opportunities, ideas, technologies, and capabilities that exist in foreign markets, the more those innovators can develop innovative solutions in response. The world is rich in problems, yet iforganizations are innovative only in their own markets, their knowledge base and exposure to problem sets is incomplete.

In summary, APEC economies possess a unique opportunity to move beyond facilitating trade in existing products and services to fostering the world’s leading regional environment in which both the production—and ensuing trade and usage—of innovative new products and services is maximized, thereby driving economic growth and improving the quality of life for citizens not just in APEC economies, but worldwide. To make this a reality, APEC members will need to foster open economies that allow the free flow of capital, people, ideas, goods, and services across borders in ways that promote competition. However, to realize this vision, member economies will have to not only rethink their approach to trade and investment, but also embrace critical core innovation principles. Indeed, economies are unlikely to achieve sustainably high rates of innovation if their governments have not put in place a broad range of innovation-enabling policies that create the conditions in which organizations throughout an economy—whether private enterprises, government agencies, or non-profit entities—can successfully innovate. To help them do so, this report provides a structured assessment of policies informing the innovation capacity of the 21 APEC member economies. Moreover, it highlights the most effective policies APEC members have used to build their innovation capacity and describes how APEC members can learn from one another.

The report assesses APEC member economies on their strength in six core policy areas:

1. Open and non-discriminatory trade, market access, foreign direct investment, and standards policies;

2. Science and research and development (R&D) policies that spur innovation;

3. Digital policies that enable robust deployment of information and communications technology (ICT) platforms that support a broad range of digital applications;

4. Intellectual property rights (IPR) protection policies;

5. Robustness of domestic competition and new firm entry;

6. Open and transparent government procurement policies.

In preparing this report, we searched extensively to identify as many indicators relevant to the six core innovation policy areas as possible. The report includes every indicator relevant to an economy’s innovation policy that we were able to identify, provided that sufficient data existed for the indicator to provide coverage across all (or almost all) APEC economies. This study assigns weights to the six core innovation policy areas—and then to the sub-indicators which comprise each innovation policy area—based upon an extensive review of the scholarly literature on innovation policy and our own judgment and expertise in the field. Overall, the six core innovation policy areas receive fairly balanced weights in the study, as Table ES-1 shows. For economies to create an environment in which innovative organizations and innovation in general flourishes, it’s vital that they craft innovation- and competition-promoting policies with regard to market access, foreign direct investment, and standards; science and R&D; digital/ICT; and intellectual property rights, and so economies’ scores on each of these four policy areas accounts for 17.5 percent of their overall score. An economy’s openness to trade—characterized by open market access, receptivity to foreign direct investment, and participation in collaborative, international standards-setting processes—has become an increasingly important bedrock pillar of its innovation capacity. Likewise, economies’ science and R&D policies—such as levels of government and corporate R&D investment and higher-education R&D performance—are crucial to the development, diffusion, and adoption of new technologies that substantially drive innovation. For its part, ICT has become a central driver of innovative new services and business models, productivity improvements, and economic growth for developed and developing economies alike. And economies that fail to provide and enforce intellectual property rights stifle innovation by failing to provide adequate incentives and protections to innovators while discouraging the inflow of foreign technology and investment. Economies’ policies that promote domestic competition and entrepreneurship as well as government procurement which fosters innovation are also important, and so economies’ scores on each of these two core innovation policy areas account for 15 percent of their overall scores.

The intent of this study is to provide a generalized sense to APEC economies of how well they are doing relative to their peers on these six core innovation policy areas, so that they can identify their strengths, weaknesses, and opportunities for improvement in innovation policy. As this is an overall framing and assessment report, it does not report economies’ individualized scores; rather APEC economies are ranked as upper-tier, mid-tier, or lower-tier on each of the six core innovation policy areas, with those ranks calculated based on economies’ performance on an array of key sub-indicators relevant to each core policy area. (In total, the study assesses 73 sub-indicators.) The tiered rankings of economy performance in each of the six core innovation policy areas were constructed using equidistant partitions of the set of weighted aggregate scores derived from each economy’s normalized sub-indicator scores. Economies’ ranks on the six weighted core innovation policy areas are then aggregated to produce an overall ranking reflecting the strength of their innovation policy capacity, as shown in Table ES-2.


The six core innovation policy areas

The study finds Australia, Canada, Chinese Taipei, Hong Kong, Japan, New Zealand, Singapore, and the United States to have the most robust innovation policy capacities in the Asia-Pacific region. Chile, Korea, and Malaysia are in the mid-tier, and Brunei, China, Indonesia, Mexico, Papua New Guinea, Peru, the Philippines, Russia, Thailand, and Vietnam are in the lower-tier. Table ES-3 shows where each APEC economy stands with regard to each of the six core innovation policy areas.

Economies’ ranks on the six weighted core innovation policy areas are then aggregated to produce an overall ranking reflecting the strength of their innovation policy capacity, as shown in Table ES-2

Table ES-3: shows where each APEC economy stands with regard to each of the six core innovation policy areas

Trade: As innovation and trade policy have become increasingly intertwined, openness to trade characterized by open market access and receptivity to foreign direct investment (FDI) has become an increasingly important bedrock pillar of an economy’s innovation capacity. Free trade benefits all economies by allowing each to specialize in producing the products or services for which it has comparative and/or competitive advantage. This also suggests that economies shouldn’t specialize in all technologies; rather, trade enables them to specialize in what they are good at and trade for the rest. A vital component of free trade is economies’ openness to both inward and outward foreign direct investment. Research shows that FDI contributes significantly to regional innovation capacity and economic growth, in part through the transfer of technology and managerial know-how. In fact, a study comparing East Asian with Latin American economies found that the larger trade and foreign direct investment flows demonstrated by East Asian economies explained their relatively stronger technological growth than that of the Latin American economies. Another important component of economies’ trade policies is their use of voluntary, market-led, and global standards that promote innovation and competition while creating global markets for products and services.

This study assesses eight measures of APEC economies’ trade, market access, and foreign direct investment policies, assessing indicators such as their average tariff levels, tariffs on advanced technology products, degree of restrictions on services trade, participation in regional trade agreements, openness to FDI, and use of standards policies. It finds that Australia, Chile, Hong Kong, Japan, New Zealand, Singapore, and the United States exhibit the greatest openness to trade, market access, and foreign direct investment among APEC economies. Brunei, Canada, Chinese Taipei, Indonesia, Papua New Guinea, Peru, and the Philippines are mid-tier economies, while China, Korea, Malaysia, Mexico, Russia, Thailand, and Vietnam are lower-tier economies.

Science and R&D: Science and R&D policies—including those regarding R&D tax incentives, government R&D expenditures, and university ownership of intellectual property—boost economies’ innovation potential while enhancing their ability to benefit from technology-based innovation. But science and R&D policies, such as the ability to partake in R&D tax incentives or receive R&D grants, should not discriminate against foreign firms operating domestically, for economies that do so limit their own ability to reap benefits from the sharing of ideas, knowledge, and skills that enhance the entire global innovation system. Moreover, leader economies’ science and R&D policies ensure that the terms and conditions of technology transfer, production processes, and proprietary information are voluntary and left to agreement between individual enterprises.

An analysis of five sub-indicators in science and R&D policy finds Australia, Canada, Chinese Taipei, Japan, Korea, Singapore, and the United States to be leaders. They are followed by Chile, China, Hong Kong, Malaysia, New Zealand, Russia, Thailand, and Vietnam in the mid-tier and Brunei, Indonesia, Mexico, Papua New Guinea, Peru, and the Philippines in the lower-tier. This study finds a slight difference in emphasis between the science and R&D policies of developed and developing economies. Science and R&D policies in developed economies often focus on increasing the supply of ideas and knowledge in the economy and incentivizing their commercialization, whereas in less developed economies they often involve helping a nation’s organizations (private, public, and non-profit) adopt newer and better technologies than those that are currently in use. Nevertheless, science and R&D policies in all APEC economies need to embrace elements from both approaches.

Digital Policies: Information and communications technology (ICT) is the global economy’s strongest enabler of productivity and innovation. Effective digital policies focus first and foremost on spurring the use of ICT throughout the economy, as the vast majority of benefits from ICT, as much as 80 percent, come from the widespread usage of ICT, while only about 20 percent of the benefits comes from its production. Leading economies recognize that the greatest opportunity to improve their economic growth lies in increasing the productivity of their domestic sectors, particularly through the application of ICT.

This report assesses 34 sub-indicators to evaluate APEC economies’ digital policies. Australia, Canada, Chinese Taipei, Hong Kong, Japan, Korea, New Zealand, Singapore, and the United States possess the digital policies which contribute most strongly to their economies’ innovation capacity. Chile, China, Malaysia, and Peru represent mid-tier economies, while Brunei, Indonesia, Mexico, Papua New Guinea, the Philippines, Russia, Thailand, and Vietnam are in the lower-tier. Economies with the best digital policies, including policies relating to data privacy, security, and telecommunications, implement them in ways that minimize their trade-distorting and investment-limiting impact while promoting greater global alignment of ICT policies. Leader economies have also embraced membership in the World Trade Organizations (WTO’s) Information Technology Agreement, which has substantially eliminated barriers to trade in ICT products.

IPR: Effective protection and enforcement of IPR encourages innovators to invest in research, development, and commercialization of technologies while promoting their dissemination throughout the Asia-Pacific region. But weak intellectual property rights protections reduce the flow of foreign direct investment and technology transfer. Without adequate intellectual property protections, there will be less innovation overall, and this hurts all economies. Moreover, as the World Bank finds, IPR reform tends to deliver positive economic results, regardless of an economy’s level of development.

This report assesses five sub-indicators to evaluate economies’ IPR protection policies. These indicators show that Australia, Canada, Hong Kong, Japan, Korea, New Zealand, Singapore, and the United States have implemented the strongest intellectual property protections among APEC economies. Brunei, Chile, Chinese Taipei, Malaysia, and Mexico are mid-tier economies with regard to intellectual property rights protections, while China, Indonesia, Papua New Guinea, Peru, the Philippines, Russia, Thailand, and Vietnam are lower-tier economies that have the most room to strengthen intellectual property protections.

Domestic Competition: Vibrant domestic markets supported by a sound and fair regulatory environment that allows both existing and new firms to compete on a level playing field remain a lynchpin of prosperity. Indeed, one of the strongest drivers of innovation and productivity growth is the existence of competitive marketplaces. This includes removing regulatory restrictions, incumbent protections, cross-border trade restrictions, and labor market restrictions that inhibit competition. Leading APEC economies feature regulatory systems that are transparent and non-discriminatory, provide due process, and include opportunities for meaningful engagement on the part of all stakeholders.

This study assesses eighteen indicators of APEC economies’ degree of openness to domestic market competition, organized into three categories: the regulatory environment, the competitive environment, and the entrepreneurial environment. On these measures, Australia, Canada, Chinese Taipei, Hong Kong, Japan, New Zealand, Singapore, and the United States exemplify the greatest degree of openness to domestic market competition among the APEC economies. Brunei, Chile, China, Korea, Malaysia, Thailand, and Vietnam are mid-tier economies, while Indonesia, Mexico, Papua New Guinea, Peru, the Philippines, and Russia are lower-tier economies in this category.

Government Procurement: Because government procurement accounts for such a large share of most economies, ensuring fair and open government procurement practices has become a vital aspect of realizing liberalized global trade. A core principal of market-based trade is that government purchases should be made on the basis of the best value for government, not on the basis of national preferences. Yet this does not mean that APEC economies should not orient their procurement policies to become strong drivers of innovation. Indeed, government procurement policy is an important and legitimate component of economies’ innovation strategies. However, APEC members’ government procurement policies should be transparent, non-discriminatory, openly competitive, and performance-based. In particular, APEC members should not make the location of the development or ownership of intellectual property a consideration when awarding government procurement contracts. Further, APEC members should not impose requirements on foreign firms that they must license their intellectual property to a domestic entity either in order to receive permission or access to compete in local markets or to participate in foreign government procurement contracting activity.

An assessment of four key government procurement policy indicators reveals that Canada, Chinese Taipei, Hong Kong, Japan, Korea, Singapore, and the United States have implemented government procurement policies that contribute most strongly to their economies’ innovation capacity. Uniformly, leader economies are full members of the WTO’s Government Procurement Agreement (GPA). Australia, Chile, and New Zealand are mid-tier economies with respect to government procurement, while Brunei, China, Indonesia, Malaysia, Mexico, Papua New Guinea, Peru, the Philippines, Russia, Thailand, and Vietnam are lower-tier economies.

Conclusion: The Asia-Pacific region has the capacity to be the world’s most innovative. To realize this vision, APEC economies need to implement policies with regard to trade, science and R&D, ICT, intellectual property rights, domestic market competition, and government procurement in ways that maximize their innovation capacity but without distorting global trade. To accomplish this, APEC economies’ policies will have to be predicated on transparent, non-discriminatory, market-based principles that embrace both global standards and the free flow of talent, capital, information, products, services, and technologies. Moreover, APEC economies’ innovation policies need to accord respect for innovators’ intellectual property rights while creating incentives for them to keep innovating in ways that promote improvements in economic growth and quality of life.

How Global Foreign Aid Supports China’s Clean Tech Mercantilism

March 23, 2011
| Blogs & Op-eds

While the United States, other developed countries, and global institutions like the World Bank continue to provide China billions in foreign aid and development assistance, particularly to combat global warming, China plays these countries and institutions for suckers, continuing to take their billions even while refusing to open its market to foreign products, particularly in clean energy.

"Bridges": The Good, the Bad, and the Ugly of Innovation Policy

December 21, 2010
An audio reading of ITIF Senior Analyst Stephen Ezell's article in "Bridges," the Austrian Embassy Office of Science and Technology Policy's magazine.

The Winter 2010 issue of Bridges, the Austrian Embassy Office of Science and Technology Policy's magazine, features a summary of ITIF's recent survey of innovation policies employed by countries around the world, The Good, the Bad and Ugly and the Self-destructive) of Innovation Policy. This groundbreaking report urges action to thwart the growing innovation mercantilism practiced by some countries, and to move the world towards a more principled basis of competition. Read more »

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